Demand for coworking spaces drops

New Delhi|Kolkata: Coworking spaces are grappling with lower-than-usual demand as the Covid-19 crisis shutters many small businesses and social distancing norms reduce the number of desks available, said half a dozen coworking companies that ET spoke to. Companies have also stalled or pushed back their expansion plans.

However, an increase in enquiries from bigger companies that have given up their offices and now seek flexibility will help soften the blow in the long term, companies like Awfis, Skootr, AltF, Dextrus, Garage Society and IndiQube said.

Many are also pivoting to ‘managed office spaces,’ which are not sold on a per desk basis, to continue generating revenue, as social distancing norms have reduced maximum occupancy by 50% gnawing into the bottomline. Some are launching new products like subscription-based work-from-home packages, transport services and ‘Covid disinfection packages’ for managed offices. “Overall demand has reduced,” said Yogesh Arora, founder of AltF co-working.

“Smaller companies have not renewed or are unable to pay,” said Amit Ramani, CEO of Awfis. However, he added that the impact of this was low as a majority of their business comes from larger enterprises. “Around 70% of our clients have lock-in periods of 12 months or more.”

Rishi Das, co-founder of IndiQube, said there was a 15-20% dip in demand. However, he said this would be offset in long term by larger companies looking for cheaper locations. “If one location is declared a containment zone, then they can have another as a recovery site.”

Co-working spaces also said occupancy remains in the range of 10-20%, and will remain stuck at 50-75% if the pandemic continues as social distancing norms have to be implemented.

“Social distancing, which means maximum capacity won't be utilised, and the cost associated with more frequent deep-cleaning cycles will also eat into the bottomline,” said Robin Chhabra, CEO, Dextrus.

Companies are diversifying to continue generating revenue. Both AltF and Awfis said they are now doubling down on their managed office business, where the companies set up and run an office for a client. Awfis is also focusing on its turnkey solution, where it builds the office for a client from scratch.

Coworking companies like Awfis, AltF and Garage Society have also launched work-from-home packages. Companies are provided an ergonomic chair, desk, internet connection, IT support. AltF’s offering also has Covid-19 inclusive health insurance and premium Zoom membership, while Awfis provides access to an app which has productivity and attendance tools.