There is a ‘sensible' demand for office space across the country with enquiries in most cities showing an upswing, says Mr Madhusudan Thakur, Regional Vice President, Regus, multinational provider of outsourced office space.

Sensible?

Well, the market is recovering from a slowdown, and the enquiries are at ‘credible' levels, not overly optimistic and indicate plans to firm up deals in the coming months, he clarifies. Potential clients are planning for requirement of space in the next six months, and are not just ‘window shopping.'

Regus has over a million square feet of office space under management in 16 locations in nine cities and is in the process of expanding. The move is backed by strong market development. Regus is one of the largest office space providers with over 1,100 centres in over 500 cities in 85 countries.

Interesting trends

Also, there are some interesting trends, he says. Definitely the numbers of people striking out on their own appears to be on the increase; demand for office space from such individual entrepreneurs and small outfits is picking up.

The concept of outsourced office space is finally coming into its own here, with domestic clients more open to the idea of leasing such space rather than setting up shop for themselves. This is driving a definite shift in the market with business increasing from local clients rather than in the traditional segment, the multinationals.

MNCs continue to be cautious, though they too are evincing interest in office space. There are not too many in the market and they want less than 5,000 sq.ft and are not keen on finalising the deal soon. Earlier, nearly three-fourths of the market was dominated by the large players but now it is closer to 50-50, he says.

In most cities, the BFSI segment, the financial sector, is the major contributor to the demand, says Mr Thakur. In Chennai, there is a strong knowledge base in financial sector and that is driving the market.

Typically, these are people with work experience of about 10 years deciding to branch out on their own. These cater to the financial services segment looking at small contracts – chartered accountants, financial analysts and planners, and then there are the technical consultants catering to the automobile components sector. The enquiries from such clients are increasing by about 50 per cent year-on-year, feels Mr Thakur.

These are the players looking for about 500 sq.ft of office space and two-three work stations. The positive feature of this market segment is that the deals are finalised fast, in days, with decision making in the hands of individuals or a small team.

Another segment that is contributing to the demand is the return of the ‘life that went out of the market early in 2009' which coincides with the better performances by the financial majors. All these represent a 30-40 per cent growth potential yearly for workspace solution providers such as Regus, he says.

Regus will expand to smaller towns including Coimbatore, Kochi, Visakhapatnam, Bhubaneshwar, Lucknow and Pondicherry and expand in existing locations.

For instance, in Chennai where it has over 65,000 sq.ft under management in two locations, it is looking at more locations, especially in the southern suburbs. In Mumbai where it has a quarter of a million feet, it will add about 70,000 sq.ft across six locations, taking the total centres in the financial capital to 12.

Major drivers

The drivers of the market, apart from financial sector in Chennai and Mumbai, are the telecom and IT sector in Bangalore, where IT is showing a strong revival and designing relating to the automotive industry is also picking up. Medical transcription work is growing in Hyderabad while in Gurgaon, Noida, Pune, the demand is increasingly driven by voice-based BPOs, especially the offshoring market, he said.

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