A report from Knight Frank has found that 3.2 million square feet will be vacated during 2020 as smaller coworking firms struggle to stay afloat throughout lockdowns.
Around a quarter of coworking stock in India’s top major cities is operated by smaller firms, which equates to around 6.4 million square feet.
“The Indian coworking business, much like other sectors will feel the impact of the COVID-19 pandemic with the fringe players likely to make an exit,” said Shishir Baijal, Chairman & Managing Director of Knight Frank India. “This will be a period of shake-out for this segment where we expect larger players with a greater weightage of enterprise tenants to endure.”
Despite small coworking operators suffering, Knight Frank believes that demand from large companies will help the flexible office industry grow. However, demand from startups and smaller businesses is expected to drop tremendously.
Even large coworking firms that can accommodate enterprise tenants will have to renegotiate monthly costs and terms as the economy impacts companies large and small.
Still, companies who want a physical office will opt for a workspace that is cost efficient, agile and offers short-term leases.