OFFICE REAL ESTATE AT CUSP HYBRID V/S BACK TO WORK

BY Realty Plus

Ramita Arora, Managing Director- Cushman & Wakefield Bengaluru setting the tone of the discussion stated that for decades large enterprises have been adapting to business cycles, socio economic and micro-economic changes. “In year 2020 there was 100% work from home and everyone was predicting death of office. Come 2022, the story has changed. Companies are mandating employees to come back to office. From 15-20% in Q2 we have reached about 60% in Q4. The conversations are now around new definitions of hybrid working and workspaces. Some companies want employees to come back regularly to office, some others are alright with flexibility and adopting to hybrid work while a few are happy to let their employees work from home because they don’t want to lose their employees.”

Juggy Marwah, CEO, Prestige Office Ventures shared his views, “Work from home was in practice earlier on as well. What shape it has taken at this point in time is different. The world is going to see a mixed bag and hybrid work culture is no way detrimental to Indian commercial real estate growth story. India’s office market is almost back to 2019’s 49 mn sq ft office absorption with close to 42mn sq ft absorption this year. The workspace is definitely changing with hybrid working and developers too are shifting strategies to offer office buildings and spaces accordingly.”

Manas Mehrotra, Founder and MD, 315Work Avenue added, “Most of the corporates are working on the customised way of what suits them and are looking for solutions based around it. From 40% corporates working virtual in 2020 to mere 10% in 2022, it’s a great jump and indication that things are changing from hybrid to coming to work. Thus, we see a good demand coming from corporates for co-working spaces.”

Pravin Bachhav – Country Head, CRE India Operations, Stallion Universal India Pvt Ltd expressed, “Some organizations have critical functioning like banking and finance, R&D centers, and manufacturing where work-from-home and hybrid does not work. Sectors like IT services, Travel, and Tourism etc. can adopt work from home or hybrid to a certain extent. But lately, employees too want to come back to office culture, collaborating and going out with fellow colleagues.”

Ravindra Pai, Managing Director, Century Real Estate Holdings Pvt Ltd said, “Hybrid is here to stay. Organisations have always been known to work in an offline mode. The Pandemic forced the organisation to work in online mode. Thanks to the technology facilitating it, organisations were able to move into an online space. After the pandemic, both the organisations and the employees have a choice. However, given the issue of moonlighting which affects confidentiality, organizations are mandating return to office. The fine line to tread is to how to use hybrid work culture without compromising on productivity, employee retention and confidentiality. How to create a balance between online & offline, what jobs can adapt to the hybrid models and what cannot and how to create policies around these factors. I believe whichever organisation is able to crack the hybrid code they will be the new differentiators. How the companies will evolve is the question that needs answering.”

Ravi Ahuja, COO- Commercial, Brigade Group shared another perspective, “From a human capital perspective, some things that stood out in a recent global research is the emphasis shifting from work-life balance to work-life integration. And what’s more important to the corporates today is the output rather than work hours. Companies are looking for productivity not only in the functions that they do but also in the skill sets that the employees have. Whether they are able to manage and provide the relevant output for which they have been hired, even from home. The productivity tools or hybrid work models will have to take into account these aspects as the foremost primary consideration.”

Vivek K Chandy, Joint Managing Partner, J. Sagar Associates gave the legal point of view, “The largest off take of office space especially in Bengaluru has been in the IT&ITES industry. That industry is subject to the most rigorous provisions of confidentiality. When an employee is working from home office or third space, there is a huge concern about client’s data breach, which may lead to lawsuits by foreign clients amounting to damages in millions of dollars. It’s a matter of time, when the IT/ITES companies will start clamping down on employees to come back to office.”

PUZZLE OF WORKSPACE REDUCTION OR GROWTH

Ramita Arora shared that looking at how the organisations have structured themselves in the last three years, they have seen growth and have added workforce. “The question for developers is how to fine-tune their commercial real estate portfolio as per the reduced space demand by certain organizations as well as larger spaces with low density for certain other companies.”

Giving the developer’s standpoint Juggy Marwah stated, “Developers’ strength is that they are apt at going with the flow. It is during the challenging time, you need forward thinkers and hard hustlers on the ground. Irrespective of the fluctuations, last year we were at about 37 million office space and this year we were at 42 million office space. Next year we will be about 47 million office space. In the last 20-30 years we have seen major bumps and comebacks. That’s not a bad average to have. We should be positive and keep building and looking forward for the economy to move forward.”

Ravi Ahuja added, “Today when we are talking about slowdown or recessionary trends globally, India is an outlier. New sectors are doing well, many Indian unicorns are getting funded and some of the developers now have multi-asset class portfolios. The benefit of being in multi-asset class and also being in multi-geographies is the spread of risk.”

Ravindra Pai shared, “At this point in time, residential sales are buoyant, luxury sector is bouncing back and on commercial realty front, companies are planning larger spaces. Developers are responding from a planning perspective as per the number of desks required and number of collaboration spaces in offices and providing infrastructure facilities and amenities.”

Vivek K Chandy added, “It’s a matter of time before the employers start getting tough, requiring most of their employees to come back. This will lead to office real estate demand both for large floor plates as well as smaller boutique offices.”

Pravin Bachhav agreed, “Companies would need collaborative spaces and agile workplaces. We will see change in dynamics in terms of designing and modern age fit-outs becoming important.”

Manas Mehrotra stated, “Today flex is around an average of 15% whereas a few years back, it was 8%. We are seeing strong momentum in terms of flex operators taking up office space and in another 2-3 years, it will be the largest consumer of commercial office spaces.”

COMPANIES GO WHERE THE TALENT IS. TIER-II CITIES OFFER PHYSICAL AND SOCIAL INFRASTRUCTURE THAT IS REQUIRED BUT THEY NEED TO UP THEIR GAME IN TERMS OF INTERNATIONALLY COMPLIANT OFFICE BUILDINGS TO ATTRACT MNCs.

Tags : office real estate hybrid spaces Ramita Arora Managing Director- Cushman & Wakefield Bengaluru Juggy Marwah CEO Prestige Office Ventures Manas Mehrotra Founder and MD 315Work Avenue Pravin Bachhav – Country Head CRE India Operations Stallion Universal India Pvt Ltd Ravindra Pai Managing Director Century Real Estate Holdings Pvt Ltd Ravi Ahuja COO- Commercial Brigade Group Vivek K Chandy Joint Managing Partner J. Sagar Associates