Coworking clients rapidly giving notices to vacate office premises to save on costs due to economic slowdown due to Covid-19

Landlords of co-working spaces not extending relief on rentals to space providers during nation-wide lockdown

Scepticism around coworking building on account of heightened focus around social distancing

This broadly sums up the news on coworking these days. 

Covid-19 and the lockdowns imposed thereby, have brought the survival of this industry (Link: Detailed blog on this) under a massive question mark.

India has the 3rd largest startup ecosystem and 2nd largest freelancer ecosystem in the world. We are home to more than 50,000 startups and 15 million freelancers and a sizable chunk of them turn to coworking as an enabler for growth. 

This industry works on a simple principle: taking up bigger spaces on long term contracts, investing to turn them into inspirational workspaces and selling them in smaller customized parts on short term contracts to make them accessible and affordable for small companies, startups and freelancers. 

Due to this pandemic, our workspace providers are getting impacted at both ends. They are rapidly receiving notices from clients for vacating the premises (who are also looking to cut costs) and on the other hand, having to dip into their reserves to make good on salaries and rent payments to their landlords, not many of whom have extended any relaxation. Erosion of existing revenue, burn on cash reserves, and a bleak forecast of revenue in the coming few months owing to the heightened focus on social distancing paints a worrisome picture.

Majority of our space partners are either startups or standalone businesses and have created these beautiful workspaces by making financial investments in them. Hence, they cannot afford to wash their hands off of this situation. In such a scenario, if no one steps up to support them, how are they expected to make it out of this without staring at financial ruin?  

 

Being one of the biggest platforms for coworking in India, working with over 200 of these spaces serving more than 10,000 members, we feel that it is our duty to voice these concerns, sensitize each one of you to the situation and garner as much support for our space partners as possible to help them get through this. 

Keeping this in mind we request the Government of India to help steer us through by 

• Fast tracking TDS refunds for last year to bring cash flow relief
• Enabling companies to take at least 50% of excess GST input as refund for cashflow
• Waiving off the interest on EMIs as well for this time period in line with the extension of the term period by 3 months

Also, we request all the landlords of these space providers, building owners, developers and concerned associations to come together and extend relief on rentals for this period of nation-wide lockdown and be open to exploring alternate models like revenue sharing instead of rentals going forward as we enter a new normal. This will help our space providers immensely in providing for their teams’ salaries, retain clients and at the same time many small businesses will be able to retain their offices.

Small measures like this will go a long way in helping give a fledgling industry a chance at survival.

The survival of this industry is imperative for the growth of many others. It gives people a ray of hope, the courage to take the entrepreneurial route and wings to fly. In some small way, it will define the future of entrepreneurship in our country and the shape and form our economy will take in times to come.

Linked: Detailed blog on this