Change in the pattern of workplace design and organization
Realty+ in conversation with Shrinivas Rao, MRICS, CEO-APAC-Vestian Global Workplace Solutions.
How has the occupier profiles changed in the last few years?
Shrinivas Rao, CEO-APAC, Vestian: The last few years have witnessed substantial change in occupier profile across the key office markets in the country. Office demand, till a few years back, was predominantly led by the IT/ITeS sector in major cities such as Bengaluru, Delhi NCR, Pune, Chennai and Hyderabad, with other sectors such as BFSI, Manufacturing, Pharma and Telecom accounting for the rest of the occupiers’ pie. Mumbai, on the other hand, has been primarily driven by the BFSI sector. While IT/ITeS (and BFSI in Mumbai) still comprise a large chunk of the office space occupiers, its share has observed a gradual decline in recent years, largely owing to the emergence of other services sectors such as e-commerce and the strengthening of the manufacturing and industrial sector. Of late, the increasing absorption trends shown by co-working space operators have further altered the occupier profile that was characteristic in the past decade.
What are the major implications of new Occupation Profiles on workspace real estate?
Shrinivas Rao, CEO-APAC, Vestian: The growth in new occupiers’ profiles has had several implications, some of them are:
- Change in the pattern of workplace design and organization
- Increased use of tech-based data analytics, online operations and smart media tools
- With millennial workforces preferring to be mobile, efficiency of space use has become increasingly important
- The rise in the popularity of co-working/flexible space operators has led to a noteworthy trend in the space-constraint CBD office markets –the trend of office space taken up by co-working space operators in older office projects in the CBD markets. This offers start-ups and other new entrants with the option of being centrally located at reasonable rentals as per their space requirements
Are Occupiers now in the position to make greater demands on workspace providers? Why?
Shrinivas Rao, CEO-APAC, Vestian:Occupiers are in a position to make greater demands on workspace providers, given there is a supply-demand mismatch which gives occupiers a higher bargaining power. This happens mostly in an over-supply situation where rent free period, partial expenses for fit-outs and rent abatements may be offered as incentives.
Which occupier sectors are dominating the flexible workspace market and why?
Shrinivas Rao, CEO-APAC, Vestian: Demand for co-working spaces in India is primarily led by start-ups, freelancers and SMEs. Co-working space operators usually offer a better geographical spread and enjoy higher scalability as they are not restricted by what they own. Majority of the occupiers of co-working space choose such workspace to benefit from flexibility of lease term, followed by reduction in capex.
Lately, there has been significant interest evinced by larger corporates in such collaborative spaces, attracted by the potential of gaining exposure through networking opportunities and other synergistic approaches. Companies such as Google, Adobe, Cisco, E&Y, Dell, Xander and HSBC, amongst others, have leased desks in co-working spaces in key office markets across the country.
Which occupier sectors are dominating the prime office space in CBDs and Why?
Shrinivas Rao, CEO-APAC, Vestian: The CBD and off-CBD markets have typically been preferred by companies looking for smaller office configurations. Strategic location within the city, excellent connectivity with prime residential areas and the presence of developed physical and social infrastructure are some of the reasons that have attracted occupiers towards the CBD and off-CBD office markets. These markets have a strong presence of occupiers from manufacturing, consulting, BFSI, media, government and public sectors, as well as IT/ITeS companies with smaller set-ups. Lately, there has been a proliferation of co-working space operators in the CBD markets of the city, offering office space options to start-ups and other new entrants.