The emergence of Shop-Cum-Office (SCO) spaces in Tier II cities has indeed transformed the landscape of the ever-evolving real estate market in India. The concept of SCO has gained prominence after the pandemic as it has attracted businesses, provided cost-effective solutions, enhanced convenience, contributed to urban development, diversified the commercial real estate sector, and stimulated economic growth. The novel concept of merging retail and office spaces within a single building or complex enables retailers to maximize their property usage while delivering numerous benefits to customers and businesses. That’s why the demand for SCO spaces are soaring high across India.

The booming commercial real estate sector has witnessed a shift in the approach of developers towards the market dynamics, as a majority of developers are now moving towards Tier II cities to look for new business horizons. With its advanced connectivity and availability of basic facilities like schools, hospitals, banks, shopping markets among others, Karnal is one such city which has caught the attention of a host of developers and buyers. It is blessed with a strategic location that makes it the gateway to Delhi, Chandigarh, Punjab and Himachal Pradesh. Better employment opportunities, growth of the real estate sector and supporting governance in Karnal have driven up the demand for Shop-cum-Office spaces.

Tier II cities are often home to numerous SMEs and startups. SCO spaces provide an attractive proposition for businesses, particularly small and medium-sized enterprises (SMEs). They offer the advantage of having both a retail storefront and office space in a single location, enabling businesses to streamline their operations and cut down on costs. This has led to increased demand for SCO spaces in Tier II cities as businesses seek affordable yet well-equipped spaces. As SCO spaces contribute to the growth and expansion of SMEs, it positively impacts the local economy and leads to job creation in retail, hospitality, and support services.

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Compared to standalone retail or office spaces, SCO spaces often offer a more cost-effective solution. Businesses can benefit from the shared infrastructure and facilities, such as common areas, parking spaces, security, and utilities. This affordability factor makes SCO spaces an appealing option for entrepreneurs and startups looking to establish their presence in Tier II cities, especially in Karnal.

The rising popularity of shop-cum-office spaces is closely linked to the changing nature of the retail industry. With the advent of e-commerce and online shopping, consumer behavior has shifted significantly. Shoppers now expect a seamless shopping experience that integrates online and offline channels. Shop-cum-office spaces cater to this changing behavior by providing businesses with the opportunity to have a physical retail presence alongside their online operations.

Shop-cum-office spaces provide the flexibility to adjust the retail and office areas according to evolving business needs. Retailers can easily modify the store layout, allocate space for inventory storage, or create temporary pop-up spaces within the same premises. Also, the introduction of SCO spaces adds diversity to the real estate portfolio in Tier II cities. Previously, the market was predominantly dominated by residential and standalone commercial or retail properties. The availability of SCO spaces allows investors to diversify their investments and tap into the growing demand for mixed-use properties.

Tier II cities often have unique local markets and customer preferences. Shop-cum-office spaces enable retailers to tap into these markets by establishing a localized presence. They can adapt their product offerings, store design, and marketing strategies to cater to the specific needs and preferences of the local population.

The Indian real estate sector may continue its upward trajectory in the forthcoming fiscal, as industry experts opine. With a buoyancy of job creation, projected growth rate of 8-9 percent and a recovery from the downturn in the stock market, the Indian economy shows a positive outlook. As more individuals are stepping into the market, the demand for Shop-cum-Office spaces will surge and boost the real estate economy.

Shop-cum-office spaces have had a significant impact on the real estate market in Tier II cities. They have stimulated commercial development, met the demand for mixed-use spaces, diversified the real estate portfolio, supported SMEs, driven urbanization and infrastructure development, and created employment opportunities. These changes have made Tier II cities, especially the Karnal region, more vibrant and attractive for businesses, investors, and residents, leading to their overall growth and development.

(By Santosh Agarwal, CFO and Executive Director, Alphacorp. Views are personal)