Moving past the second wave of the pandemic, the commercial real estate sector is on the path of gradual recovery. Prior to COVID-19, the real estate industry was at its prime with commercial and residential activities in full swing. However, with the imposition of an abrupt lockdown in 2020, the real estate sector faced a slowdown in activities; and despite these hurdles, the industry has managed to overcome the challenges.
The current situation led to the adoption of digital technologies for launching new projects, scheduling virtual site visits, & offering properties with higher safety, hygiene, and amenities to support the new norm of social distancing.
With economic activities back on track after the second wave of the pandemic, the commercial real estate is poised for a potentially disruptive transformation. Going forward, the commercial real estate market will primarily see growth in the coming months due to the fast pace of vaccination in the country. Furthermore, considering the interest of millennials to return to work, the commercial space will witness demand across business sectors. The recent boom in digitalization, job opportunities, and demand for office across the country will alter the face of commercial real estate segment.
Some of the key trends the industry will witness are:
Rise of Hub and Spoke Model: Flex on Fleek
Given the work from home & hybrid working trend on rise, many companies are booking flex spaces to provide work locations in closer proximity to where employees live. This has resulted in many enterprises to leave their long-term leases and partner with coworking players for their workspace needs.
Since shared spaces don’t require companies to take the entire office on lease, companies have the flexibility of booking a specific number of seats for a specific time frame. While flex spaces have employees from different companies, cultures and fields working at one place, the collaboration of these personalities results in strong community building and yields in higher productivity. Additionally, by opting flex spaces, companies are not bearing the additional cost of office maintenance & electricity bills.
The reverse migration to Tier II & Tier III cities and lack of ideal work infrastructure has made work from home a bit challenging. Additionally, employees are now looking for flexibility and work near home options. According to the Awfis Workspace Survey 2021, the hub and spoke model is gaining momentum with 58% of the participants expressing an interest to work from the nearest branch office/ or coworking space provided by their employer. In line with the same, many companies are using shared workspaces equipped with modern-day facilities to create an office-like environment for employees based in smaller cities and towns.
Tier II & III cities: The sunrise spots for CRE
With urbanization rapidly making inroads in Tier II & Tier III, developers & flex workspace operators are eyeing these markets to transform them into the future of commercial real estate in India. In fact, since work from home & hybrid working are becoming a permanent reality for several companies, a significant cluster of the employees population has moved back to their hometowns for affordable and quality living. With this unprecedented migration, realtors are now presented with opportunities that will allow them to chalk our development plans of commercial hubs in these smaller markets. An added appeal of these markets is also derived from their low rents thereby leading many businesses to shift their offices to these cities to save on operational costs.
Today, accelerated by government initiatives like Atmanirbhar & Startup initiatives, Tier II & Tier III cities are moving towards rapid infrastructure and have become the new employment hubs. Due to high population in metro cities, the impact of pandemic was slightly high than the Tier II & Tier III cities and upon lifting of the lockdown, developers and companies showed more interest in smaller towns & cities to revive their businesses.
Automated Future: Digitalization of CRE
As building owners work to understand and respond to emerging behavioral patterns of customers and create safe spaces, prop tech has taken a front seat in their business decisions. Developers & coworking operators are now realigning their space designs to accommodate touchless access, automated attendance, voice-controlled features to avoid maximum surface contact and ensure maximum safety of employees.
Furthermore, AI is set to become a major tool in commercial real estate as companies can evaluate property valuation, type, carpet area, location and other parameters. With AI & Cloud-based technologies, it is easier for workspace operators to keep a tab on various tenant profiles, tenant application, inspection requests, etc. to streamline the leasing & other processes.
As more people return to work in the coming months, social distancing, air quality & hygiene criteria will be taken care by prop-tech. Features like sensor-activated disinfectants, retina entry scanners, digitalized ventilator systems, etc. will define the future of commercial real estate.
This story appeared in the 23 September, 2021 issue of The Times of India and is authored by Amit Ramani, Founder & CEO, Awfis. This article was originally published at : Changing Realty: The new face of commercial real estate (indiatimes.com)