Upscale Old Buildings In Central Business Districts To Stop Companies From Moving Away
The demand for commercial real estate has been shifting from central business districts to outer areas at a rapid pace. In the past one decade, the change has been remarkable. The global economy has been going through periods of great fluctuation, partly because of changes in monetary policy. This has led to wide fluctuations in real estate markets too. Real estate developers and buyers are witnessing a period of growth and reconstruction.
In metropolises like New Delhi, Mumbai and Chennai, office space absorption was largely in central business districts (CBDs) in the past. As intra-city infrastructure and connectivity has been rising in the past, demand for commercial real estate has been rising in the suburbs and in the periphery of cities.
The difference between prime and premium office space
When real estate developers build office space, they are guided by the assumption that sales is the single biggest factor behind growth. A distinction needs to be made between prime office space and premium office space. Luxury or opulence are the hallmark of premium office spaces, while prime or iconic office space does not need to be luxurious.
“Iconic office spaces should be more about sturdiness and less about luxury. Office spaces, if well located and properly maintained, becomes a symbol of your organisation as well. We have very well seen how iconic offices become not just a landmark, but a mark of your identity as well,” says One Leaf Group Managing Director, Rahul Chamola.
Today, office goers spend nearly one-third of their lives inside their office. They discuss important partnerships, alliances and finalise deals inside their office. So, office spaces have seen a major transformation in the recent past.
Offices are not spaces where you spend eight hours with teeth-clenched determination. Socialising and networking are important aspects of life inside office. Real estate developers with a futuristic approach towards building have kept pace with this transformation. They have already started recreating improved structures of ageing building in central business districts (CBDs).
Striking a balance between 'good to have' and 'affordability'
While constructing office space, real estate developers should always keep in mind that clients who occupy commercial real estate are not willing to compromise on 'must haves'. Rakesh Yadav, Chairman of Antriksh India says, “'Must haves' should not be compromised at any cost in commercial real estate, because they form the basic pillars. Residential real estate is more about providing a roof over your head, but in commercial real estate, you work towards carving out an identity under that roof. So, there shouldn't be compromises at all.”
Buildings in CBDs are a perfect blend of prime and premium office spaces. It is not easy to strike the right balance between affordable and perfectly suitable premises, and this is especially true of large occupiers. So, well-designed projects based on imaginative concepts are bound to have an edge. A large number of commercial occupiers of these spaces (CBDs) are looking for an ideal blend of location, features and pricing.
Larger occupants are migrating to newer micro markets
Large-scale renovation of old buildings is long overdue in central business districts. As rents are high and space is constrained, potential buyers and tenants are moving towards other micro markets. If nothing is done, occupiers of commercial real estate in central business districts will move to other micro markets.
“The biggest reason why occupiers have been moving towards newer micro markets is the new trend of office spaces having many facilities in one place. This way, you are able to achieve better connectivity, cut down operating costs and to some extent, attain employee satisfaction of working in an iconic location,” says Vikas Sahani, Chairman and Managing Director, Property Guru.
Gurgaon is now the favourite office space destination of corporations
Gurgaon has emerged as the most sought after office space destination in India in the recent past. Gurgaon has a good mix of IT and corporate occupiers. So, developers need to keep this in mind while doing upscaling or rebuilding in CBDs. Varying demographics, urbanisation and rapid technological advancement will continue to have a huge impact on commercial real estate markets.
It is relatively difficult to commute to suburban areas. Modern day employees do not wish to commute for long hours. So, if buildings in central business districts are renovated, this will retain many consumers of commercial real estate in the core of cities.