The new face of commercial real estate
After the second wave of the pandemic, the commercial real estate industry is on the path to a gradual recovery. Before COVID-19, the real estate industry was at its peak with commercial and residential activities booming. However, with the imposition of a brutal lockdown in 2020, the real estate sector has faced a slowdown in activities; and despite these obstacles, the industry has been successful in overcoming the challenges.
The current situation has led to the adoption of digital technologies to launch new projects, plan virtual site visits and offer properties with higher safety, hygiene and amenities to support the new standard of social distancing.
With the resumption of economic activity after the second wave of the pandemic, commercial real estate is poised for a potentially disruptive transformation. Going forward, the commercial real estate market will mainly see growth in the coming months due to the rapid pace of vaccination in the country. In addition, given the interest of millennials in returning to work, the commercial space will experience demand in all industries. The recent boom in digitization, job opportunities and demand for office space across the country will change the face of the commercial real estate segment.
Some of the key trends the industry will witness are:
Rise of the Hub and Spoke model: Flex on Fleek
With the growing trend of home working and hybrid working, many companies are reserving flexible spaces to provide workplaces closer to where employees live. This has led many companies to quit long-term leases and partner with coworking players for their workspace needs.
Since shared spaces do not require companies to rent the entire office, companies have the option of reserving a specific number of seats for a specific period. While Flexible Spaces have employees from different companies, cultures and fields working in one place, the collaboration of these personalities results in community building and increased productivity. In addition, by opting for flexible spaces, companies do not bear the additional costs associated with office maintenance and electricity bills.
Reverse migration to Tier II and Tier III cities and the lack of ideal work infrastructure has made working from home a bit difficult. Additionally, employees are now looking for flexibility and work options close to home. According to the Awfis Workspace Survey 2021, the hub and spoke model is gaining momentum with 58% of participants expressing an interest in working from the nearest branch / or coworking space provided by their employer. On a related note, many companies are using shared workspaces equipped with modern facilities to create an office-like environment for employees based in small towns.
Tier II & III cities: Sunrise spots for CRE
With urbanization rapidly advancing into Levels II and III, developers and operators of flexible workspaces are considering these markets to turn them into the future of commercial real estate in India. In fact, as work from home and hybrid work becomes an ongoing reality for many businesses, a significant group of employees have returned to their hometowns for quality, affordable living. With this unprecedented migration, real estate agents are now presented with opportunities that will allow them to chalk up our plans to develop commercial hubs in these small markets. An added attraction of these markets also comes from their low rents, which leads many companies to move their offices to these cities to save on operating costs.
Today, accelerated by government initiatives such as Atmanirbhar and Startup initiatives, level II and level III cities are moving towards rapid infrastructure and have become the new hubs of employment. Due to the large population in metropolitan cities, the impact of the pandemic was slightly higher than Level II and Level III cities and when the lockdown was lifted, developers and businesses showed more interest for small towns and cities to relaunch their activities.
Automated future: Digitization of the CRE
As building owners strive to understand and respond to new patterns of customer behavior and to create safe spaces, prop technology has come to the fore in their business decisions. Coworking developers and operators are now realigning their space designs to enable contactless access, automated presence, voice-activated features to avoid maximum surface contact and ensure maximum employee safety.
Additionally, AI is fast becoming a major tool in commercial real estate as businesses can assess property valuation, type, carpet area, location, and other parameters. With AI and cloud-based technologies, it’s easier for workspace operators to keep tabs on different tenant profiles, tenant requests, inspection requests, and more. to streamline rental and other processes.
As more people return to work in the coming months, the criteria of social distancing, air quality and hygiene will be taken care of by prop-tech. Features like sensor-activated disinfectants, retinal entry scanners, digital ventilation systems, and more. will define the future of commercial real estate.
The opinions expressed above are those of the author.
END OF ARTICLE