Over the last decade, the commercial real estate market has transformed and matured, in the backdrop of policy reforms, institutional investments, foreign partnerships and growth in the services sector.
The average demand pan-India, is expected to increase to 46 million sq ft during 2018-2021, as compared to 41 million sq ft noted in 2014-2017. Keeping up with the pace of demand, new supply has also seen an increase of 48 per cent during the said period.
Changing preferences of occupiers and how it impacts commercial real estate developments
However, the decision making process for office space developers has become tough, with regulations like the sunset clause, technological advancements, new corridors being connected with infrastructure developments in the suburbs and shrinking availability of quality assets in core locations, in the backdrop of rising rents.
Factors such as the changing dynamics of the workforce, alternate workplace strategies, co-working spaces and technological advancements, among others, need to be accounted for, while designing a suitable real estate or location strategy. There has also been a sea change among occupiers in the past few years, in their approach towards renting. Occupiers are looking for professionally-managed spaces, improved efficiency and agility to resize the office, with respect to headcount changes.
Impact of co-working spaces on office leasing
The influx of co-working spaces has altered traditional leasing, with occupiers adapting to both flexible office space and fixed office concepts for core operations. Employees continue to be at the centre of decision making, as collaboration and synergies become essential elements of the work culture and wellness is given high importance. Flexible workplace providers and corporates are even organising fitness programs and events, offering healthy food choices at the workplace or providing gym and break-out zones for relaxation, aiming at a stress-free work environment to improve productivity.
Office spaces undergo a transformation
Such disruptors have forced companies to refurbish existing offices and adopt agile workplaces, to attract new talent and retain the existing employee base.
It is not only the physical aspect of the workplace that has witnessed changes but also the mind-set, with corporates offering flexible timings and recreation activities such as a gaming stations, or indoor games. The workplace is no longer seen as a place for ‘only work’ but as an ‘enabler’, to achieve the common goal of contributing to the organisation’s growth. Companies are striving to inculcate a feeling of belongingness, which will only improve as the battle for talent intensifies in the coming years.
Role of technology in the commercial real estate segment
As the fourth industrial revolution sets in, with advances in technology altering the way we live, work, shop and interact, daily routines have become dependent on technology.
Drones, blockchain and data analysis are changing the way the real estate sector operates and has helped to increase interaction with stakeholders, thus, resulting in faster decision making and smarter concepts. The concept of ‘smart’ has caught, up with ‘smart offices’, ‘smart homes’, ‘smart buildings’, etc., in the past few years.
While technology has increased and needs to be adopted, to stay ahead of the curve, it should be embraced with caution. As systems get automated and artificial intelligence as well as robotics are adopted, incremental space take-up can be a challenge in the long-term.
(The writer is senior associate director – research, Colliers International India)