coworking is simply disrupting the commercial real estate market

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Coworking transforming Corporate Real Estate

CREATIVE DESTRUCTIONPRESENTED BY INSTAOFFICE

Source : CBRE, Colliers, JLL, Regus, Deskmag, InstaOffice analysis.

With over a million coworkers by 2017, Coworking is no longer just a fad.

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20155,10,000

7,35,0002016

1,030,0002017


For office seekers, Coworking is not an interim

solution any more.

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63%2013-2014

2015-201657%

SHARE OF MEMBERSHIPS WHICH ARE 12 MONTHS

OR SHORTER

Source : CBRE, Colliers, JLL, Regus, Deskmag, InstaOffice analysis. 4

The Paradox Of Commercial Real Estate

The Disconnect

The Transformation

More Than Demand Aggregation

CONTENTS


THE PARADOX …


Approximately 26% drop in absorption for prime office space in Q1 2016 over Q1 2015

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VACANCY RATES

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20.6%DELHI-NCR

7.1%BENGALURU

9.3%PUNE

17.1%CHENNAI

20.1%MUMBAI

NEW COMPLETIONSTRANSACTIONS

The vacancy rates continue to be uninspiring across the board. The scale of the problem even bigger in SBD and peripherals


Demands look promising going forward with increasing business confidence


The evolving economic and structural dynamics reflect strong growth in demand for small offices.

Transactions involving small sized office Space (less than 5,000 sq ft)

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LAST YEAR19.75%

25%THIS YEAR


THE DISCONNECT …


The definition of an office is undergoing a fundamental change.

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Mobile & Dynamic

Fixed Locations

Pay for what you use

Fixed Cost

Employee engagement

Low employee convenience

Reduce property cost

Low business convenience

Work nearer home & reduce commuting times

Low Flexibility


76%Respondents displayed an increasing

inclination towards following a flexible workplace strategy; preferring pure open workstations.


User preferences suggest strong drivers for smaller and flexible offices

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80%Believe there will be a large increase in people who go part time later in their careers

75%Executives say they work more on the move than they used to

70%Intend to hire more freelance Staff in the coming years


The change is not only restricted to startups or early stage companies.

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55%of total desks are empty at any point of time.

Cost is the single most critical factor affecting management decisions over the next two years, with almost 57% of the

respondents impacted by internal CAPEX and external costs of rental escalation.


THE TRANSFORMATION …


There are strong fundamental changes driving this transformation.

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SUSTAINABILITYreducing impact of work on

environment

TECHNOLOGYInformation, communication, web & mobile

TransportCost and time spent commuting

PEOPLEDemographics, expectation and behaviour

REAL ESTATE COSTescalating cost are creating

economic pressure

cultureLifestyle and flexible

working


There is a large addressable market and unmet demand for small and flexible offices.

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176mn MOBILE PROFESSIONALS

Grade A real estate demand

Market Size of USD 70bn


"Process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one"

CREATIVE DESTRUCTION

Joseph Schumpeter


Reduction in office occupancy costs by over 50%...

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Capital costs and one time office setup expenses

Fit Outs

Furniture and Furnishing

Technology Infrastructure

Deposits for Rent and CAM

Commissions

Rent

Maintenance Charge

Housekeeping and Security

Receptions, Admin and IT staff

Internet & Communications

Insurance

Utilities

Basic Consumables / Beverages

Repairs and Refurbishment

Recurring Variable Costs

Recurring Fixed Costs, irrespective of the size of the team and changing office space needs

User doesn’t need to bear any Capex or Fixed Costs

Reduction of over 50% in occupancy costs

One single price paid on Per Seat basis (Scalable and Flexible)

Conventional Lease Coworking Model


Optimal utilization of the office inventory, generating higher rental yields for the

landlords.

Super Area 5,000 sq. ft. 5,000 sq. ft.

Rent (INR / sq. ft.) INR 55 / sq. ft. –

Super Area / Desk – 65 sq. ft.

Number of Desks – 76

Average Revenue per Desk – INR 14,000

Landlord’s Share 100% 30%

Revenue p.m. for the Landlords INR 275,000 INR 319,200

Marketing Cost / Commissions 1 month –

Average Long Term Utilization 75% 90%

Annual Revenue 2,268,750 3,447,360

Annual Surplus – INR 1,178,610

Conventional Lease

InstaOffice Model

Higher Floor Efficiency

Includes all extra services

Better Monetization

Increase of over 50%

Methodology: InstaOffice shares Gross Revenue with the real estate partners / landlords. In other models, we take a percentage of the Gross Revenue, while Opex and Capex are borne by the landlord.

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Source : CBRE, Colliers, JLL, Regus, Deskmag, InstaOffice analysis.C o n f i d e n t i a l

I N S TA O F F I C E , S O H N A R O A D , G U R G A O N

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B R I E F I N T R O D U C T I O N

InstaOffice


BRIEF INTRODUCTION TO INSTAOFFICE


VALUE FOR LANDLORD AND USER“I have a commercial space of 3,300 square feet in

Gurgaon which had been vacant for nearly 18 months. I

partnered with InstaOffice … InstaOffice has started to

generate expected rents from the space. Additionally,

just six months ago, when I had tried to sell my property,

I had been offered a rate of Rs 6,000 per square feet.

But now, given its occupied by InstaOffice and its

generating market rent, I am being offered a rate of Rs

8,500 per square feet,” says K Govindarajan, a property

owner.

Hindustan Times

InstaOfficeIN PRESS


Immediate Monetisation

Poor rental yields

Positive net absorption

Long vacancy periods

Communities

Hierarchies

Scalability

Large floor plates

C R E AT I N G V A L U E F O R M E M B E R & L A N D L O R D S

InstaOffice

Pay per use

Fixed Office Spend

HAPPY MEMBERS

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Disclaimer:

This presentation above may include forecasts, projections and other predictive statements that represent

InstaOffice’s assumptions and expectations in light of currently available information. These forecasts, etc.,

are based on industry trends, circumstances involving clients and other factors, and they involve risks,

variables and uncertainties. The actual performance results may differ from those projected above.

Consequently, no guarantee is presented or implied as to the accuracy of specific forecasts, projections or

predictive statements contained above.

The information contained within this document is proprietary to InstaOffice and it reserves the right to all information provided. The recipient agrees not to distribute, share or use any part of the material without express written permission of InstaOffice. The recipient would treat this material as Confidential Information.

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