The Rise of Serviced Office Space Operators in Calcutta
The pandemic has brought in a significant shift in the work culture across the world, with many companies preferring a distributive workplace model. As a result, serviced office space operators offering plug-and-play workspaces have seen a doubling of their presence in Calcutta in the last two years. According to data compiled by Knight Frank, the city had over a million square feet with flexible office space operators by the end of 2022, compared with about 0.5 million square feet before 2021. The period also saw several new entrants setting up base, including Simpliwork, UrbanWrk, and Workshala, among others.
The existing players, led by India’s largest co-working space operator Awfis, also aggressively expanded in 2021 and 2022, with plans to continue significant growth in the future. Sumit Lakhani, Deputy CEO of Awfis, predicted the addition of around 5,000 to 6,000 new seats in the Calcutta market. The demand for IT & ITeS space rose significantly post-COVID in Calcutta, and Lakhani believes that the talent pool migrating to other cities is partly staying back here.
The founder of Smartworks, Neetish Sarda, also plans to double the office under management in Calcutta to 400,000 square feet in 2023, citing many new companies that have set up offices in the last 24 months in Calcutta, looking to diversify into new geographies. Sarda also pointed out that more clients in the city are now looking at a longer-term association with the flexi-space operators, with the majority of their clients signing up for 3-and-a-half-year leases.
Co-working operators have been a game-changer in the commercial office leasing space, according to Abhijit Das, Senior Director (East) of Knight Frank. The co-working tenant gets significantly more flexibility than a plain lease in terms of capital expenditure, lease tenure, expansion potential, and support services. The landlord, on the other hand, gets comparatively faster occupancy and higher return from the assets, depending on the type of deal they have executed with the co-working operator.
Three factors have contributed to the growth of co-working space in general and in Calcutta. Firstly, the pandemic forced corporates to re-think their long-term office leasing policies, and post-pandemic hybrid workplace models demanded occupiers look at flexible office spaces instead of entering into a long-term contract. Secondly, clients are looking at distributive office space, preferring multiple smaller locations to one large office. Lastly, the proliferation of serviced space operators has worked well for real estate developers, as they are getting tenancy faster, and it is easier for them to market space.
Das predicts the east India leasing market to get much higher occupancy from co-working operators as current players sign up for more space and new operators enter the market. “In addition, like the previous two years, 2021 and 2022, more first-timer companies in east India are expected to take the co-working route for their initial exposure to the region, thus enhancing office space consumption through the co-working operators,” Das said.
In conclusion, serviced office space operators have made a significant impact on the commercial office leasing space in Calcutta, with their flexible and adaptable workspaces. With their significant expansion plans in the city, they are poised to meet the growing demand for distributive workplace models and provide clients with a long-term association that suits their needs. The growth of co-working space is expected to continue as corporates increasingly look to flexible office spaces as a solution to their evolving needs.
