Demand for Neighbourhood Co-working space will rise post-COVID, says Aditya Verma, Founder & CEO, The Office Pass

We believe preference for Neighbourhood Co-working space will increase in the post-COVID period. says Aditya Verma, Founder & CEO, The Office Pass. Speaking exclusively to Realty & More, Verma said that The Office Pass (TOP) has set aggressive target to expand over the next 3 years. Following are the excerpts of his chat with Realty & More:

Q. What kind of companies are looking for spaces?

A. Before the pandemic, Co-working was a preferred format only among start-ups and small organizations. Last 24 months have seen revenue and productivity stagnate for Cat A Indian companies and MNCs and they are under pressure to moderate cost, including office operation cost, which is the third biggest cost after manpower & marketing. These companies are moving away from traditional long-term leases to more flexible workspaces. By doing so they are not tied-up in long lock-ins. Additionally, they get flexibility to increase or reduce capacity in line with their business dynamics. 

Post pandemic, companies are also moving away from centralised offices to distributed offices. Employees do not want to commute long distance, using public transport, for the fear of catching the infection. They want to work from an office that is close to their residence. Since it is not practical for companies to open 4-5 smaller offices in different parts of each city; they rely on Co-working operators like The Office Pass (TOP) to provide this service. Through these tie-ups, companies are able to save valuable time and effort and provide comfort to their employees.   

These behavioural changes make Coworking a preferred choice even among large corporate

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Q How is neighbourhood co-working different from co-working spaces

The Office Pass (TOP) is the only company in the industry offering Neighbourhood Coworking which is different from conventional coworking as it caters to target audience nearby (< 5 kms). The fundament premise is that people love to work in a high-quality office facility close to their place of residence / business rather that commuting long distance. This makes TOP unique in its target segment, pricing, marketing and size of offices. TOP offices are located in the CBD areas as well as near residential Neighbourhood so people can reach the nearest office without having to commute long distance. 

Q. What opportunities exist in tier 2 and 3 cities for the co-working players?

A. Currently the commercial real estate stock is concentrated in the in top 8 Indian cities. The total grade A stock is around 600-650 mn sq ft. Annually around 35-40 mn sq ft of fresh stock gets added; while the absorption is 30-35 mn sq ft (pre COVID). There is almost 15% of vacancy in the national commercial real estate market.  

For knowledge organizations, office space is normally the second or third highest expense after manpower & marketing, so it pays to think strategically. There is little evidence to suggest that people who went back to their hometowns during the pandemic will not return to cities.  

Economic activity in India is concentrated in top 8 cities. There is limited scope – if one wishes to pursue growth in tier 2 and 3 cities. In my views it will take a decade or more for the infrastructure development to reach small towns and districts. Till that happens, it is difficult to conceive a thriving Co-working business outside of main cities.   

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Q. What are your expansion plans?

A. The Office Pass (TOP) has set aggressive target to expand over the next 3 years. We believe preference for Neighbourhood Co-working space will increase in the post-COVID period. TOP currently runs 12 Co-working offices in Delhi NCR. 10 of these offices are in Gurgaon with one each in Noida, CP and South Delhi. Total 102 companies use TOP Neighbourhood Co-working spaces. Over the next three years, we plan to open 35 Neighbourhood Co-working and 15 Managed offices in 5 Indian cities and target over 1,000 companies.     

Q. How do you see rest of 2022 unfolding for the co-working industry in the country? 

The year 2022 started on a high note for the Co-working industry. The average occupancy among Coworking operators reached 75% during the first quarter of 2022. Most Coworking operators have aggressive expansion plans which will unfold over the course of the year. The Co-working Industry absorption which was 12-15% of all new Commercial Real Estate absorption is likely to increase to 25% over next 2-3 years and year 2022 will mark the beginning of this trend. 

At The Office Pass (TOP) we opened 2 new offices in Gurgaon during Jan-March 2022 adding close to 1000 seats. The average occupancy for TOP reached 83% in March 2022 and the business is profitable. With companies moving away from traditional leases and movement from centralised to distributed offices, we predict 2022 to be a high growth year for the business. TOP will open 10 new offices and expand outside of Delhi-NCR over the course of 2022.     

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