DEMYSTIFYING MODERN OFFICES
As one of the world's leading economies, India is expected to contribute about 15% of the global growth this year, according to the IMF. The office sector plays a crucial role in this growth, as it reflects the economic activity, innovation, and competitiveness of the country. However, the office sector is also facing a major transformation, as the needs and preferences of the tenants, especially the large and/or multinational ones, are changing and evolving rapidly. These changes are influenced by various factors, such as fast growth, talent acquisition, employee commute, modern amenities, COVID-19 pandemic, climate change, and safety and security. In this article, we will examine some of these factors in detail. One of the main challenges faced by tenants is the need to attract and retain high quality and technologically savvy professionals. As the global competition for talent intensifies, tenants need to attract and retain the best talent in their fields. This requires office buildings that can provide a conducive and stimulating work environment that enhances productivity, creativity, and collaboration. CBRE’s India office occupier survey of this year emphasizes this by stating occupiers strive to establish a ‘new normal’ for the workplace with the right tools, spaces and experiences that cannot be easily recreated outside the office. Some of the features that office buildings can incorporate are: According to CBRE 2023 survey, ~91% of occupiers were positive about their business either expanding or recovering. And so the next on the list for large tenants is the need for scalability. As they add employees rapidly, their demand for office space outgrows their current space. This creates a need for flexible and adaptable office buildings that can accommodate their changing needs. Some of the solutions that office building owners and developers can offer are: A major concern for tenants is the commute fatigue of their employees. Due to poor physical infrastructure, traffic congestion, and public transportation issues in India, employees may face long and stressful commutes to their workplaces. This can affect their morale, performance, and retention. Therefore, tenants prefer office buildings that are located in strategic and accessible locations that can reduce the commute time and stress of their employees. Some of the factors that office buildings should consider are: As the work culture and job description of tenants change due to the impact of artificial intelligence, automation, and digitalization, they require office buildings that can support their new ways of working. These include flexible hours, remote work, project-based work, cross-functional teams, and innovation labs. According to the Colliers “Real Estate 3.0: Technology-Led Growth” report the rise of PropTech is sweeping the real estate sector as an innovative digital transformation. Technology in the real estate segment that was largely confined to listing residential and commercial properties is now infiltrating every aspect of real estate. To accommodate these changes, office buildings need to provide modern amenities that can enhance the functionality and aesthetics of the workspaces. Some of the amenities that office buildings can offer are: The COVID-19 pandemic has posed unprecedented challenges for tenants as they have to cope with lockdowns, social distancing, health risks, and business continuity. As a result, they have to rethink their office space strategies and adopt new measures to ensure the safety and well-being of their employees. According to CBRE, more than 3/4th of tenants expects offices to have touchless technologies and higher air quality. Some of the measures that office buildings have to implement are: Another factor that affects multinational tenant expectations is their commitment to address climate change issues. As more multinational tenants adopt environmental, social, and governance (ESG) policies and practices, they expect office buildings to align with their sustainability goals. In 2022, more than 90% of S&P 500 companies has started reported climate impact information in its SEC filings. CBRE survey reports 83% are considering sustainability benchmarking of their properties. In other words, green and sustainable buildings will be seeing greater demand especially by large tenants. Some of the criteria that office buildings have to meet are: The last factor that influences tenant expectations is the safety and security of their employees and assets. Tenants require office buildings that can provide a safe and secure work environment that can protect their employees and assets from lockdowns, strikes, terrorism, etc. Some of the features that office buildings can provide are: Modern office buildings need to meet the diverse, complex and changing needs of their tenants. To do this, they need to have professional and institutionalized property management that can enhance tenant satisfaction, adopt advanced technologies, implement sustainability goals and promote wellness of occupants. Therefore, it is essential for office building owners, managers and developers to strengthen their property management capabilities to attract and retain tenants in their properties.
Tags : global growth flexible hours remote work project-based work cross-functional teams innovation labs Ashish Mundada Integrow Asset Management Co.