India’s coworking sector has doubled in demand over four years, with major cities like Bengaluru and NCR leading the surge. Flexible, cost-effective coworking spaces are increasingly preferred post-pandemic, driving significant commercial real estate absorption growth.
India’s coworking sector is experiencing rapid growth, with demand doubling over the past four years. In the first quarter of 2023, coworking spaces accounted for 27% of the net absorption of 8.2 million square feet across the top seven cities. This marks a substantial increase from 14% in the same period in 2019, reflecting a significant shift in workspace preferences.
Bengaluru and the National Capital Region (NCR) led the way, accounting for two-thirds of the net coworking absorption in Q1 2023. Pune and Chennai also saw notable activity during this period, absorbing about 0.52 million square feet of coworking space. Across the top seven cities, there was a 90% growth in net coworking space absorption, rising from 1.3 million square feet in Q1 2019 to approximately 2.18 million square feet in Q1 2023.
The post-pandemic landscape has driven many companies, especially within the IT/ITeS sectors, to prefer flexible coworking spaces over traditional offices. The flexibility and cost-effectiveness of coworking spaces, often located in varied settings like residential areas, malls, and hotels, are significant draws compared to conventional offices that typically come with long lock-in periods.
Low vacancy rates in Grade A offices in cities such as Bengaluru, Chennai, and Pune propel coworking demand. Similarly, in Delhi NCR, the scarcity of commercial space contributes to coworking setups’ growth, particularly in areas like Gurugram and Noida.
In Q1 2023, southern Bengaluru, Hyderabad, and Chennai witnessed net office absorption of around 4.6 million square feet, with coworking players accounting for 26% of this total. The western markets, including the Mumbai Metropolitan Region and Pune, saw a net absorption of approximately 1.48 million square feet, with coworking spaces contributing 24%. In NCR, coworking entities represented 32% of the roughly 1.89 million square feet of absorbed office space, while in Kolkata, they accounted for 12% of the 0.25 million square feet absorbed in Q1 2023.
The surge in coworking space adoption reflects a broader trend towards flexible and adaptive work environments. As businesses continue to seek cost-effective and versatile solutions, coworking spaces are well-positioned to meet this growing demand, further solidifying their place in India’s commercial real estate landscape.
