Andheri East emerges as the new HUB for co-working office spaces as Wework, Smartworks, Regus, Empire Business Centre, iKeva open new centres after BKC.
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Year 2017 witnessed surge in leasing activity in Grade A corporate buildings in BKC and neighbouring locations by co-working & serviced office centres. However, year 2018 commenced with increased leasing demand for Grade A office space in Andheri and Powai micro-markets.
Recently, Regus leased 55,573 sqft in Kanakia Wall street, Andheri East at minimum guaranteed rent along with few clauses related to net revenue sharing for 5-year lease term. Typically, Regus leases spaces less than 20,000 sqft. However, sensing rise in demand and shrinking quality supply, Regus marked its first deal greater than 50,000 sq ft.
Also, Wework is opening its 2nd centre soon in Marol, Andheri East where it has leased out an entire building named ‘The Masterpiece’ with total leasable area of 61,764 sqft. In another deal, Empire Business Centre has opened its 2nd centre in building named ‘Fulcrum’, near Mumbai International Airport. Empire Business Centre leased 16,691 sqft in the 5th floor. Similarly, Smartworks, Awfis & iKeva are also opening new centres in Andheri East. Smartworks’ Andheri-Marol centre is expected to be operational by May 2018. Kindly note that other leading co-working operators such as Awfis, 91springboard and Innov8 already have presence either in Andheri East or neighbouring locations such as Seepz.
In our view, Andheri & Powai markets will see more opportunities in future compared to other micro-markets in Mumbai for co-working spaces/serviced office spaces because of:
- Better connectivity and close proximity to both International & Domestic Airports.
- Rental affordability for start-ups, SMEs & Freelancers.
- Availability of Grade A space.
- Bigger catchment of office seekers to serve.
CRE Matrix carried out an exercise wherein we compared cost per seat in a co-working space versus renting a Grade A commercial building in Andheri East. The Key findings are as follows:
Currently, Grade A offices in Andheri East register market rent of INR 110-130 per sqft per month. Presuming 80 sqft chargeable area per seat, the cost per seat for a 10-member team in a grade A office would range between INR 18,500-20,500 in Andheri including rental, house-keeping, electricity & other charges.
The Co-working operators in Andheri East micro-market are offering dedicated seats in range of INR 9000-15000 per seat per month. Other than sheer cost benefits, other benefits to tenants include flexibility for adding / subtracting seats, no lock-in periods, no cost for interiors, no other house-keeping costs etc.
Across major cities, Co-working/Serviced offices has leased out more than 5.2 million sqft from 2015. In 2017, absorption in co-working/Serviced offices was 2.83 million sqft which is 186% higher than that of 1.52 million sqft in 2016. In 2015, absorption levels were just 0.55 million sqft in this space. Bangalore holds maximum share of 42% followed by Mumbai at 20%.
Average per seat cost for leasing a Grade A office across Mumbai micro-markets:
|Micro-market||Average per seat cost in Grade A Office (INR)|
|BKC Core||31,000 – 40,000|
|Andheri & Powai||18,500 – 20,500|
|Lower Parel||22,000 – 25,000|
|Goregaon & Malad||16,000 – 19,000|
*Presuming 80 sqft chargeable area per seat & All other expenses
**Source: CRE Matrix
Listed below are recent centres by co-working/serviced office providers opened.
|City – Micromarket||Co-working/Business Centres||Building||Area (sqft)|
|Mumbai – Andheri||Regus||Kanakia Wallstreet||55,573|
|Mumbai – Vikhroli||WeWork||247 Park||82,722|
|Mumbai – Worli||Coworks||Birla Centurian||61,940|
|Mumbai – Marol||WeWork||The Masterpiece||61,764|
|Chennai – Guindy||Smartworks||Bharti Vilas||45,000|
|Mumbai – Kalina||91 Springboard||Kagalwala House||18,000|
|Bangalore – MG Road||Workspace||Independent Building||65,000|
|Mumbai – Powai||Awfis||Chemtex house||42,656|
|Bangalore – Hebbal||WeWork||RMZ Latitude||66,425|
|Hyderabad – Hitec City||91 Springboard||Jubilee Enclave||20,000|
|Bangalore – Koramangala & CBD||Awfis||HM Vibha Towers, Prestige Samrah Plaza||51,832|
|Mumbai – Andheri||Awfis||Prime Corporate Park||13,094|
|Mumbai – Vashi||Awfis||Raghuleela Arcade||35,140|
|Mumbai – Andheri||Empire Business Centre||Fulcrum||16,691|
*Source: CRE Matrix