Co-working space cos go on fundraising spree to fuel growth
Large players in India in talks with institutional investors to raise money to fund expansions. Leasing activity rose by more than 30% annually, crossing 47 million sq. ft. during January-September this year, says CBRE South Asia Q3 office report.
WeWork’s parent, The We Company, withdrew its initial public offering a week after the SoftBank-backed flexible office startup ousted founder Adam Neumann as chief executive last month.
Large players in India, including We-Work and homegrown Cowrks, are in talks with institutional investors to raise money, while others such as Awfis and Smartworks have already closed funding to enter new markets and to increase desk counts across cities where they already have a presence in.
Co-working as a concept has gained increased acceptance, with large companies becoming mainstream occupiers of space, constituting approximately 80% of the overall client roster. The segment contributed 15% of total office demand in the first nine months of 2019.
“We are looking to raise $200 million and are talking to both domestic and global capital. Flexible office space is here to stay and demand continues to be strong,” said Karan Virwani, CWeO, WeWork India. The company plans to double the number of desks in India to 100,000 by end-2020.
Singapore-based Keppel Land recently invested $25 million in Smartworks Coworking Space, a flexible space solutions provider, for a minority stake. “Institutional investors are still bullish on alternative space providers, despite what has happened globally,” said Harsh Binani, its cofounder.
Smartworks’ fundraising comes amid the ongoing developments around WeWork.
“We are approached by capital and strategic partners to spur growth to meet a burgeoning demand that will throw up profits, and not simply add seats as a valuation metric,” said Abhishek Goenka, CEO, CoWrks, which is looking to raise capital to fund growth.
Leasing activity rose by more than 30% annually, crossing 47 million sq. ft. during January-September this year, according to the CBRE South Asia Q3 office report.
Technology companies drove office space take-up and their share rose to 40% from 31% earlier. Research, consulting and analytics companies (19%), and flexible space operators (15%) followed technology firms, the report said.
The collaborative space segment has seen up to 300% growth in the last three years, with many firms expanding aggressively across major cities. The trend is likely to continue this year too, resulting in their share in overall leasing remaining high by end-2019.
This segment is expected to target secondary markets in tier I cities, along with major micro-markets in tier II and tier III cities.