Real Estate

The office of the future

Ascendas Plaza Bridge in Shanghai

Ascendas Plaza Bridge in Shanghai   | Photo Credit: Space Matrix

Will remote working be the norm or will we shift to shared workspaces? Nidhi Adlakha on the commercial realty segment’s lockdown moves

Over the last few days, IT professionals and owners of shared workspaces have taken to social media to discuss the ‘future of the office’. While most employees are working from home, companies are planning ahead for the post-COVID world. Last month, IT major Tata Consultancy Services announced that it aims to have 75% remote workers by the end of this year. While most employees might welcome this, the shift will have a significant impact on the commercial real estate segment. In addition, the co-working segment – which saw a boom over the last couple of years – is also likely to be impacted unless it reinvents its model with larger spaces and hygiene measures.

Shared places

Rajesh Gurumurthy, Senior Director, Head, Strategic Consulting, Tamil Nadu & Sri Lanka, at Jones Lang LaSalle, explains that as of 2019, the co-working segment accounted for 14% of total office absorption in India. “The sector, which in recent years, has accounted for a substantial share of net absorption in global gateway cities, has fallen flat as a direct result of the pandemic. During or post-Covid, there will be a couple of challenges, but it purely depends on business strategy and continuity plan.” Gurumurthy confirms that the sector will undergo significant consolidation and stress due to work-from-home as a business continuity plan in the foreseeable future.

According to a survey conducted by Chennai-based on-demand workspace platform, GoFloaters, more than 75% of the respondents said they expect to work from home at least twice a week. “Well pocketed, hyperlocal neighbourhood spaces, especially for small distributed teams, could be the need of tomorrow,” says founder Shyam Sundar Nagarajan. With many companies now open to remote working, he says large and medium offices are looking to split their excess capacity (say, a floor or a block), which will drive growth for shared office spaces. “Big companies, however, need to rehash their designs to make way for social distancing. In certain situations it may be viable to accommodate only a few thousands, so what happens to remaining employees?” He also points out that in India particularly, not all work-from-home environments are viable. “There is a section that wants to return to some form of office space,” says Nagarajan.

Post-Covid format

The Singapore-headquartered workplace design consultancy firm, Space Matrix, has opened its spaces in China and Hong Kong, and plans to resume operations in India by June 1. The impact is being felt in areas such as workforce availability and space utilisation processes, says Jaiprakash Aildasani, COO-Global, adding that the implementation of social distancing protocols has reduced the number of seats available in office and meeting room spaces. “Employee attendance is about 20%-50% compared to the pre-Covid era,” he says. As for on-ground changes, Aildasani says that in the short term, they plan to widen passages by reducing the number of workstations. “A few common facilities will be withdrawn and temporary barriers separating bays and cubicles will come up. Air-conditioning will also need special attention.” In addition, there will be social distancing norms in common areas, anti-microbial surfaces and tech-enabled digital queues for public spaces.

At Gofloaters, Nagarajan is doubling use of disinfectants, hand sanitisers and deep-cleaning procedures. “We are working on flexible options for teams that want to work on a hybrid model where they come together only for a few days a month. More spaces in residential neighbourhoods are also on the cards,” he says.

A pre-Covid start-up office in India

A pre-Covid start-up office in India   | Photo Credit: Special Arrangement

Commercial trajectory

Over the coming weeks, many small and mid-sized companies will probably want to axe long-term lease agreements to cut back costs. What happens to the commercial realty market then? “The trajectory of the office market will be shaped by the ability of governments and financial institutions to manage the ongoing crisis, and on the requirement and usage of space. Lower employee densities and remote working options may lead to a sizeable decrease in demand, but social distancing may lead to a demand for larger spaces,” says JLL’s Gurumurthy.

Standalone workspaces are not viable in urban centres like Chennai. “The area requirement of occupiers mostly varies from 10,000 sq.ft. to 50,000 sq.ft., and it is difficult to accommodate them in standalone buildings. In addition, companies will have to spend more on operational costs compared to multi-tenanted buildings with shared facilities.”

Fast forward

So is it going to be remote working, shared spaces, or a mix of both? “While co-working options provide better flexibility, they cannot substitute owned/ self-leased workplaces, as it is difficult to create and implement your work culture in a multi-organisational setup,” says Akshay Lakhanpal, CEO-India, Space Matrix. “It would be naive to think the co-working model will take over conventional offices completely.” He sees home offices getting popular, but also work-and-stay spaces, which will be “self-sustaining communities with separate floors for work, stay and shopping/ amenities.”

Even hotels will have to adapt. Says Nagarajan, “With occupancy low for the next few months, leasing workspace could be a great strategy to bring in revenue for hotels. Rooms, meeting lounges, business centres and lobbies in and around the neighbourhood are great, reliable environments for co-working.”

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Printable version | Jun 3, 2020 12:15:24 PM | https://www.thehindu.com/real-estate/the-commercial-realty-segments-lockdown-moves/article31648647.ece

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