In recent years, corporate real estate strategies in the Indian and multinational corporations have gained immense importance from an overall planning and operations perspective of the business. Indian cities are amongst the largest office markets in Asia and we foresee emerging trends wherein more and more corporates/office occupiers are becoming confident about the Indian market and see a huge potential in times to come, thereby showing stronger occupational commitments in many of the few following ways:
1. Increasing momentum in pre-commitments in office leasing in NCR office market: In a market, which has shortage of quality real estate office supply and increasing pressure on rents, large multinationals are finding more and more viable to strategize their real estate portfolio and pre-commit space for future needs and portfolio optimization. Some of the examples include Gartner, Bank of America, BCG, Google and the likes of pre-committing space in properties include DLF upcoming Cyber Park and Unitech Signature Tower on NH 8 in Gurugram.
2. Buying real estate than leasing: Many corporates/office occupiers are going a step forward with a long-term vision on the Indian market and are even buying real estate than leasing the property. Some of the examples include IKEA buying close to 10 acres of land parcel in Gurgaon from HUDA, Lava International secured large land parcel in Greater Noida to set up manufacturing unit, Hyundai relocating its office to Gurgaon and buying commercial space in Sec 29, GSK in the past few years bought close to 60,000 sq ft in Hines One Horizon Center on Golf Course Road in Gurgaon, etc.
3. Corporates opting for longer lease terms vis-a-vis standard lease terms: Typically, in the NCR real estate market, a lease term is for 9 years. There is another trend emerging wherein corporates are negotiating a 12 or 15-year lease term/contract, thereby securing occupational rights for longer duration and protecting themselves against upsurge in market rents.
4. Building more agile workplaces & collaborating areas within the office: Occupiers today believe that the way workplace is designed, communicates a company vision and culture towards its employees and business.
5. Extended use of technology and vibrant work environment: It gives employees a sense of belongingness, transparency, trust and efficiency. Many corporates, especially in logistics and warehousing segments, are investing in emerging technologies such as robotics & automation. Amazon is one such example that invested in a robotic company in 2012, Kiva Systems, and has more than 45,000 robots in varied centers.
6. Partnership with co-working brands: Many corporates are also partnering with co-working brands to avail the attractive design, flexibility in lease terms, and vibrant environment for employees. The leasing options/choices in this category are immense. Occupiers can lease need-based office space by the hour/day/month or long term.
7. Consolidation of multiple offices into single office to achieve space efficiencies: There have been cases lately, whereby doing real estate consolidation, corporates have achieved as high as 40-50% savings in their overall operational cost, logistics improvement and employee satisfaction, thereby enhancement of overall business profitability.
8. Occupiers are opting for more intelligent, smarter and green buildings: This is beneficial for occupiers as it gives them an overall quality environment to operate w.r.t amenities, infrastructure, last mile connectivity, rich landscape, optimal energy footprints, etc.
In a nutshell, corporate real estate strategy function is becoming extremely interesting and important in the company’s overall business planning and operations. Corporate real estate strategy function has become a mainstream function, which is termed more as a business enabler that adds to the overall profitability and effectiveness of any business.
(By Vineet Anand, Director, Office Services (NCR) at Colliers International India)