With the worldwide robust vaccination drives, comes a ray of hope for establishing normalcy. However, it is quite improbable that it would be a complete restoration of the pre covid era. During the long lockdown period, the real estate industry received several blows and gained multiple boosts. The commercial real estate industry leans towards the former phenomenon. While the pandemic made people realize the importance of having a personal house, the lockdown made business owners realize the viability of remote working.
The real estate trends from 2020 to 2021 reflect how most business owners, even after the end of lockdown, did not rent a private office space but shifted towards a hybrid form of working facilitated by coworking instead.
Although hybrid working and working from remote locations are not entirely new concepts to the corporate world, it is undeniable that they have gained phenomenal traction in the past two years. Thus, the demand by individuals opting for coworking spaces has risen drastically in the real estate industry. And moreover, it is likely that it will remain the most preferred choice for companies in near future. There are many trustworthy platforms like Coworkingers that came into existence to provide coworking spaces in prime locations and with all the benefits and facilities. Coworking is a concept of office arrangement where different companies and self-employed people rent office spaces where select utilities, areas, and facilities are shared to cut the cost of the rent.
The shared services may encompass kitchen, reception, internet, printing equipment, etc. The degree of privacy and the amount of private space in each niche varies from landlord to landlord.
The concept of coworking was introduced in 2012 in India, and in less than a decade, over twelve million coworking seats exist in the country. The figures are likely to increase in the upcoming days. It is too early to comment on the fate of traditional private offices spaces, and it would be wrong to say that they will cease to exist.
A drastic transformation is underway in the real estate industry, not just in terms of the rising demand for coworking spaces. The ideas surrounding facilities, design, and technology in an office space are also changing. According to landlords, tenants are no longer attracted to simplistic facilities but look for unique facilities in the property. The coworking space is changing the real industry in myriad ways:
How Coworking Influences Commercial Real Estate?
1. Countless Management Facilities
A myriad of customizations and personalizations facilities are provided by landlords in a coworking set-up. These may include private washrooms, work desks, and the kitchen. However, coworking and sharing are inseparable concepts. Countless facilities are shared among niches like recreational rooms, napping rooms, swimming pools, canteen, medical rooms, and many other services. All these collaborative spaces have general rules of management.
However, these are not the only shared amenities. The costs of utilities such as the wifi, electricity, and water supply and services such as security are also shared. As a result, unlike the traditional offices, the burden of paying utility bills does not fall on the shoulders of one business owner. Such a set-up is viable and lucrative for freelancers who gain access to multiple facilities without having to pay in excess.
It has also been found that landlords can earn more through facilities management in a coworking space despite the reduced charges. This is because, in a coworking space, the population is density is higher than that of the traditional private office space.
2. Transcendental Services
Over the past decade, coworking has revolutionized the commercial real estate industry. Earlier, only providing access to semi-furnished office space was easy to lure clients. But today, the idea of utilizing spaces and the expectations of what an office space should offer have undergone some significant transformations. While having a pantry was always a basic demand, several clients expect luxuries such as a canteen or a mess, a high-speed wifi facility, and fully furnished spaces as fundamental features of any cost-effective working space.
Furthermore, the need for a tightly monitored and full-proof security system has increased. It is natural that even though employees of various niches and multiple freelancers would socialize and even form bonds, they would not trust each other blindly. Hence, a well-regulated security system to safeguard the privacy and confidentiality of each client is vital for giving a sense of security and facilitating harmony among coworkers.
Clearly, landlords have to make continuous additions and upgrades in their commercial spaces to cater to the increasing demands of businesses to keep their income steady.
3. Transforming the Role of a Broker
In the past and the present, brokers have been playing an indispensable role in the real estate industry. They help niches and professionals find the most viable working spaces based on their needs and instructions at a feasible commission. However, their role in the commercial real estate business is bound to change with coworking spaces increasing in demand.
Traditional office space was mostly leased for five to six years. After the lease was completed, either it was renewed, or companies hired the same or a new broker to find another space. However, today, businesses and individuals rent coworking spaces as per their short-term needs, thanks to the newly emerged work from home culture. Sometimes clients rent an office space for some hours to hold important meetings.
In such an atmosphere, where hybrid working culture is gaining traction, the role of brokers might become secondary. However, it is unlikely that they will become entirely insignificant since some niches would still want to enter long-term leases. Nonetheless, it is too early to give a highly far-fetched statement.
4. Redefining the connotation of workplace
Traditional offices had a 9-5 working culture with an hour-long lunch break at 1 pm. The facilities the workplace had to offer had little to no meaning. Until there was electricity, water, ventilation, and well-organized and hygienic space, it was enough for all the employees and owners. However, cause of the emerging coworking culture, as we saw earlier, the expectations have changed. Additionally, the meaning and purpose of office spaces have also changed.
While there was once a strict working schedule, many offices work at odd hours and for an odd amount of days in a week. Employees are given flexibility in reporting time and exiting time unless they fulfill the job assigned to them on time.
The current trends show that the current generation, the Millenials and especially Gen Z, is more inclined towards flexible working conditions and places, which foster harmony among coworkers. As a result, landlords have to offer services to make working at night more comfortable, provide greater security, and make policies that encourage socialization and communal bonding for better productivity.
5. Smoother operations
For better management of projects and smoother functioning, a traditional office setup required the renters to make amends in the workspace and ensure that the office was well provided. However, as the onus of making customizations and providing several amenities like furniture, wifi (shared commodity), security facilities in a coworking office setup lies on the shoulders of the landlords, business owners do not have to spend a fortune.
As a result, the traditional office spaces have also undergone major transformations. Many have started to provide some degree of flexibility in operating hours. Furthermore, some walk the extra mile to offer fully furnished working desks and more amenities like greater security, upgraded kitchen, etc.
This competition has only helped businesses rent spaces as per their project management requirements, rather than limiting themselves to the traditional parameters of location, amount of space, and price. Undeniably, the expectations and project requirements will only rise in the years to come, and so will the spaces.
Coworking spaces have been here for almost a decade. They have reshaped how the real estate industry looks at commercial spaces and how they operate. Earlier, the renters were not very assertive about their demands. However, today, they have become more expressive and brought a shift in power dynamics of the industry too.
To further reiterate, the coworking spaces have completely revolutionized commercial real estate by facilitating the demands of engagement facilities like recreational rooms and arcades in addition to gymnasiums and swimming pools. Moreover, coworking has made providing amenities like wifi, furniture, and other utilities that make the spaces more operational for working on projects the norm.
As we have seen, even when the restrictions were fully uplifted from the working conditions, many niches continued to work with a limited on-site workforce while most employees worked from remote locations. And due to this flexibility, offices would not need to rent huge private commercial real estate but instead find shared or co-working spaces feasible and more lucrative.
Furthermore, while the pandemic is still unfolding and new strains continue to come, the vaccination drive is also gaining pace. As a result, the restrictions imposed on businesses keep on altering from time to time. Naturally, while niches would not want to pay the whole rent if they did not utilize the space for days, at the same time, they would also want to access their business when the government regulations permit them to do so. Hence, the demands for greater flexibility in renting office spaces are bound to increase in the upcoming year.
In a nutshell, while complete elimination of physical office spaces is not possible, coworking spaces have made short-term contracts the norm. Moreover, the changes in the work culture brought by coworking drastically influence the actions of landlords.