Smaller office space gaining traction among corporates

With real estate costs increasing their overhead costs, companies are looking at smaller offices as part of their strategy to manage their real estate portfolios.

The offices range anywhere between 1,400 sq feet and 3,000 sq feet, especially in key business districts.

Developers, too, are coming up with strategies to accommodate such buyers by creating infrastructure in such a manner that the offices can be strata-sold or leased to investors.

A case in point is ‘OneBKC’ which houses some of the biggest names like Facebook and Bank of America. Developers of OneBKC are seeing a surge in demand from mid- and small-size entities wanting to pick up space in the Grade A property.

Ashish Shah, COO, Radius Developers, which owns OneBKC, said that the company is creating infrastructure for such clientele.

“There is a market for smaller office and we are looking to tap into that opportunity. The ticket size is typically in the range of 4,000 sq ft to as low as 1,200 sq ft. In fact, we have companies in sectors like investment banking, e-commerce and even law firms which are looking for smaller office space,” Shah noted.

Companies such as Motherson Sumi Systems, Tara Jewels, Archer Angel, Kriscore are among those who have taken space ranging from 1,900 to 3,000 sq feet in key office spaces in the Bandra Kurla area. Besides, OneBKC, The Capital and Crescenzo are witnessing small office space being taken up in the Central Business District.

The prices in BKC range anywhere between ₹30,000 and ₹40,000 per sq feet.

Developers and property consultants point out that besides managing real estate costs, companies in sunrise sectors want to have location advantage to provide visibility to their brands.

Property consultants like CBRE and JLL too, are reported to have formed a platform for brokering compact commercial space for investors, enabling a professional set up to this market.

The platform – ‘Investor Assist’ – enables investors of Grade A commercial space to leverage on the strength of two leading international property consultants for getting advice, access to a global client network and also assistance in increasing their visibility.

A report by CBRE’s India report, Real Estate & Workplace Strategies of Shared Services Occupiers, focuses on the growth of the outsourcing and technology industry over the last two decades; and how the sector has been implementing strategies for managing their real estate portfolios

Anshuman Magazine, CMD, CBRE South, said: “For most global corporate office occupiers setting up a shared services platform in the country, space take up strategies are tied with their overall corporate strategies.

“As such, parameters like space utilisation, efficiency and productivity play a large role in revising real estate strategies. Going forward, I believe that these larger aspects will dictate how global corporates expand their offices across key cities in the country.”

CBRE notes that organisations are now under pressure to drive down costs by increasing their workplace ‘static density’— the space per sq. ft. per workstation.

Office space absorption rose by 17 per cent this year to 35 million sq ft in seven major cities, mainly due to demand from IT/ITeS, e-commerce companies and start-ups, according to property consultant JLL India.

Cities such as Pune, Bengaluru, Hyderabad and Chennai have a vacancy rate of just 5-10 per cent, prompting the need for fresh supply to meet the growing demand.

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