Co-working Office Space Leases Fall Down by 43% in Q1 Across 9 Cities

Co-working Office Space Leases – Introduction

The commercial real estate landscape in India has seen several shifts over the past year. One of the most notable trends is the sharp decline in co-working space leasing. According to the latest report by CBRE, the first quarter of 2025 witnessed a 43% drop in leasing activity across nine major cities in India. This decline reflects the changing dynamics of the commercial real estate market, with many businesses re-evaluating their office space needs in the post-pandemic world.

Co-Working Office Space Leases

The Decline in Co-Working Space Leasing – Co-Working Office Space Leases

In the January-March period of 2025, co-working operators leased a total of 21.6 lakh square feet of office space, a significant decrease from 37.6 lakh square feet leased during the same period last year. This 43% drop highlights a dramatic shift in the demand for flexible office spaces. While the pandemic had led to an increased demand for such spaces due to their flexibility and scalability, the situation seems to have changed as businesses adapt to hybrid work models and reassess their space requirements.

CBRE’s Report: Key Insights – Co-Working Office Space Leases

CBRE’s research offers valuable insights into the evolving trends in office leasing. The data shows that co-working operators’ share in total office leasing transactions has fallen from 22% in the same quarter last year to just 12% in 2025. This decline is significant as it reflects a shift in the preferences of businesses looking for more traditional office spaces. The co-working model, while still attractive to certain sectors, is no longer the dominant player in the leasing market.

What is Co-Working Space Leasing? – Co-Working Office Space Leases

Co-working spaces are shared office environments where businesses, freelancers, and startups can rent flexible workspaces. Operators lease office buildings from property owners, set up shared workspaces, and then sub-lease the space to clients—usually businesses of various sizes. This model offers flexibility for companies that do not want to commit to long-term leases or large office spaces. Major operators like WeWork India, Smartworks, Awfis, Incuspaze, Simpliwork Offices, and IndiQube have played a key role in shaping the co-working space market in India.

Major Co-Working Players in India – Co-Working Office Space Leases

The co-working market in India is largely dominated by a few major players. Companies such as WeWork India, Smartworks, Awfis, Incuspaze, Simpliwork Offices, and IndiQube are leading the charge in offering flexible workspaces. These companies cater to a wide range of clients, from startups to large corporations. However, despite their significant presence, their share in the leasing market has seen a noticeable decline, as reflected in CBRE’s report.

The Impact of the Pandemic on Co-Working Demand – Co-Working Office Space Leases

The demand for co-working spaces saw a surge during the pandemic as businesses scrambled to find flexible work arrangements that could accommodate remote working and social distancing measures. As the pandemic has subsided, many businesses have returned to traditional office setups or adopted hybrid models, reducing the reliance on co-working spaces. This shift has contributed to the declining demand for co-working leases in the first quarter of 2025.

The Market Trend: Co-Working Operators’ Share in Leasing Transactions – Co-Working Office Space Leases

Co-working operators’ share of the total office leasing transactions in India has seen a marked decline. From 22% in the first quarter of 2024, the share has dropped to just 12% in 2025. This shift can be attributed to several factors, including the growing preference for traditional office spaces, changes in corporate leasing strategies, and the increasing adoption of hybrid work models.

Total Office Leasing Activity in India – Co-Working Office Space Leases

Despite the drop in co-working space leasing, the overall office leasing activity in India has seen a positive trend. In the first quarter of 2025, total office space leasing rose by 5%, reaching 180 lakh square feet compared to 171 lakh square feet in the same period last year. This increase in overall leasing activity indicates that businesses are still looking for office spaces, albeit with different requirements.

The Role of Major Cities in Office Leasing – Co-Working Office Space Leases

The nine cities covered in the report—Delhi-NCR, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, Ahmedabad, and Kochi—are major hubs for office leasing activity. These cities are home to a large number of businesses and multinational companies, making them key markets for office space leasing. As demand for office space shifts, these cities will continue to play a central role in the commercial real estate landscape.

Global Capability Centers (GCCs) in India – Co-Working Office Space Leases

India’s rapid rise as a hub for Global Capability Centers (GCCs) has been a key driver of office space demand in recent years. Multinational companies are increasingly setting up GCCs in India, leveraging the country’s skilled workforce to drive innovation and digital transformation. As Ram Chandnani, Managing Director of CBRE India, points out, GCCs are expected to account for 35-40% of total office space absorption in 2025, with expansions in both metro cities and emerging business hubs.

The Future Outlook for Co-Working Spaces in India – Co-Working Office Space Leases

Looking ahead, the future of co-working spaces in India remains uncertain. While the demand for flexible workspaces may continue in certain sectors, traditional office space leasing is likely to remain the dominant trend. The rise of hybrid work models and the continued expansion of GCCs in India may influence the demand for co-working spaces, but these spaces will need to adapt to the changing market dynamics to remain competitive.

The Role of Technology and BFSI Sectors – Co-Working Office Space Leases

The technology and BFSI (Banking, Financial Services, and Insurance) sectors are expected to continue driving office space demand in India. Both sectors are expanding rapidly and require flexible, scalable office solutions. This growth will likely benefit traditional office spaces as well as co-working spaces, though the latter will need to offer more customized solutions to attract corporate clients.

Challenges Facing Co-Working Operators – Co-Working Office Space Leases

Despite the growth potential, co-working operators face several challenges in the current market. The decline in leasing activity, changing corporate preferences, and competition from traditional office spaces have all contributed to the challenges facing the sector. However, with the right strategies, such as offering more customized and flexible solutions, co-working operators can navigate these challenges.

Impact of Favorable Policies on Office Space Leasing

India’s favorable state policies are playing a significant role in encouraging office space leasing. These policies are designed to attract multinational companies and support the growth of business hubs in both metro cities and emerging markets. The government’s efforts to improve infrastructure and ease of doing business are expected to continue driving office leasing activity.

Conclusion

In conclusion, the co-working office space market in India has experienced a significant downturn in the first quarter of 2025, as reflected by the 43% decline in leasing activity. While co-working spaces remain relevant for some businesses, traditional office spaces are gaining popularity. However, with continued growth in sectors like technology, BFSI, and GCCs, the overall demand for office spaces in India is expected to remain strong.

FAQs

1. What factors contributed to the 43% decline in co-working space leasing?
   • The decline can be attributed to businesses reassessing their office space needs, the rise of hybrid work models, and shifting preferences toward traditional office spaces.
2. Who are the major players in the co-working space market in India?
   • Major players include WeWork India, Smartworks, Awfis, Incuspaze, Simpliwork Offices, and IndiQube.
3. How has the pandemic affected the demand for co-working spaces?
   • The pandemic initially increased the demand for flexible workspaces, but as businesses adapt to hybrid work models, the demand for co-working spaces has decreased.
4. Which sectors are driving office space demand in India?
   • The technology and BFSI sectors are the primary drivers of office space demand in India.
5. What is the outlook for co-working spaces in India?
   • The outlook for co-working spaces remains uncertain, with traditional office spaces likely to dominate, but co-working operators can still thrive by offering flexible, customized solutions.

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