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  1. How startups are changing trends in commercial real estate

How startups are changing trends in commercial real estate

High rents would not fetch many results if a real estate person is eyeing start-ups. It is a challenge initially for a start-up to pour in lots of money towards a rental.

By: | Updated: June 21, 2016 1:00 PM
How startups are changing trends in commercial real estate Start-ups are constantly in search of an office space that understands their needs and position.

Umpteen start-ups are coming up in India each day, which is naturally the best time for real estate to rejoice. Be it big or small, most of the start-ups do look out for office spaces sooner or later. These emerging business enterprises have immense potential and who knows how big they can grow in next to no time. Who would have thought of Flipkart or Snapdeal acquiring huge office spaces and spreading to various parts of the country. It is essential that a real estate developer does take this growing industry seriously and create a relationship that will benefit both in rising.

Along with the potential of growing and scaling greater heights, real estate brokers do need to keep up with their sales strategies to ensure business development too. For instance, the trend of having long-term leases was once the thumb rule for every office space, however, now the clause is becoming more flexible. These types of changing trends are a must for both parties to understand since start-ups are a little volatile in nature and terms and conditions enforced upon them need to be reasonable. There are chances a start-up might start with full pomp and glory and might fizzle down in a year, at the same time there are chances it might start slow and emerge into something gigantic.

Here are a few aspects of a property that startups are constantly in search of:

START-UP COMPLIANT LEASE TERMS
Like mentioned above, start-ups are constantly in search of an office space that understands their needs and position. Since the size of the company can be anywhere between 2 to 30 and them grow from 100 to 500, a start-up cannot always take down an office space for five years at a stretch without knowing its future. They need a place to rent that has flexibility in terms of duration and if possible, a size of an office that can be extended.

Ideally, beneficial for both, an office space of 10,000 sq. ft can easily be converted into four or five offices for start-ups, in such a manner a real estate developer will benefit and would also cater to the needs of a start-up.

RATIONAL RENTAL RATES
High rents would not fetch many results if a real estate person is eyeing start-ups. It is a challenge initially for a start-up to pour in lots of money towards a rental. Once a company grows or gets a decent funding, they are bound to stretch rentals to a higher amount as they would look out for expansion, but before that all they need is something more viable and pocket-friendly.

LUCRATIVE LOCATIONS
Start-ups look out for locations that are in the heart of the city, ideally unique and in upcoming neighbourhood. They prefer the locations near other start-ups and a place like a co-working office space too suites them best. A location that draws much attention and has amenities like WiFi, air conditioning, security, basic office furniture, etc. The work culture every start-up looks out for is very informal and quite friendly in nature, so real estate developers need to keep that in mind as that would attract many start-ups to take up the office space.

The author is managing director, Sarvome Developers. The views expressed here are personal.

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