At a time when a lot is being talked about across the globe about the business feasibility of co-working office spaces, Noida-based co-working firm Smartworks is sure of keeping its three-year entity profitable.
“For us, profitability is the most important thing. In fact, we operate by keeping in mind that every centre needs to be profitable,” said Smartworks founder Neetish Sarda. The firm claims it is cash flow-positive and profitable at a consolidated level.
Revenue-wise, the company had clocked the Rs 100 crore-mark last year. This year, it expects the revenue to grow to Rs 300-350 crore.
At present, Smartworks has 23 operational centres in nine cities and offers 43,000 workstations spread over 2.3 million square feet. The firm believes there is room for big growth as it aims to grow to 20 million square feet and seat 2,00,000 professionals over next five years.
According to Sarda, growth would not be achieved by overlooking the profitability parameter and they would continue to focus on enterprises that account for 90-95 per cent of its revenue.
“In our three-year journey, we have learned a lot. We started off by providing office spaces to start-ups and MSME clients, but soon moved to serving enterprises. I think we have a lot more to do in this segment,” said Sarda.
Last week, Smartworks raised $25 million in a fresh funding from Singapore-based realtor Keppel Land. It plans to use the capital to grow in the nine cities it operates in, and make inroads into smaller cities such as Coimbatore, Ahmedabad, Bhubaneshwar and Chandigarh.
Smartworks even has plans to serve the regional headquarters requirements of enterprises. It is also open to acquire firms that have similar synergy and operate in the enterprise segment.
Sarda said that keeping focus on enterprises has many perks and this also differentiates Smartworks from others. “If you traditionally look at co-working, it mostly serves start-ups, MSMEs or small firms that are looking for 10-20 or 30 seats. On the other hand, the average tenure of enterprises is over and above 3-5 years and the average size of a client is over 20,000 square feet. This gives a better foresight of future. We are competing against traditional office spaces and not with co-working firms,” he said.
While co-working spaces were one of the fastest-growing segment in the real estate sector last year and were flooded with large-scale investments, recent turmoil at WeWork, one of the biggest players in the space, is said to have lowered investors’ interest and raised serious questions on the sustainability of this emerging business.
“It’s key for each player to maintain its niche. There is a lot of demand, but there are challenges when it comes to having the right property and targeting the right client. Today, we say no to more clients than we say yes to. We want to be sure that the clientele adds value to our brand,” Sarda said.