Smarter Central Business Districts reclaim investors’ preference
As a nation with the seventh largest landmass in the world, India has over 4,000 cities housing its over 1.3 billion population. While the contribution of other cities to the country’s national income is growing, a majority of the economic activity is largely limited to a few metropolitan cities. Over the last few years, there has been a renewed focus of investors and developers toward Central Business Districts which can be attributed to several developments over the last decade such as Make in India, Smart City projects, and the simplification of processes toward achieving Ease of Doing Business, which complemented the existing infrastructure and business sentiment.
This holds particularly true for shared workspaces, which is one of the fastest-growing segments of commercial real estate and is finding even greater acceptance in metros as regular business resumes after a long hiatus due to the pandemic.
Shared workspaces bring back focus to CBDs
What started out as a medium to create a democratic space for smaller businesses in the central business districts today is the driving force behind bringing back the focus to CBDs which are facing the challenges of lack of Grade A office space availability and increasing rentals. Shared Workspaces are developing spaces to enable the use of a single property by multiple tenants instead of a single tenant in the traditional form, reducing the need for multiple properties in a limited geography. This also reduces the pressure on land availability and rentals, offering respite to all the stakeholders in the value chain – developers, occupiers, and ecosystem partners.
This relief is being provided in the form of the transformation of standalone office spaces in the CBD area and equipping it with state-of-the-art amenities. Pre-COVID, several office spaces which were a part of the unorganized space and catered to the needs of small businesses went out of operation, further opening up opportunities for organized shared workspace. With the right asset mix, amenities, and occupier profile, shared workspaces enable the presence of a greater number of companies in the CBD area in an affordable manner.
As corporates diversify in SBDs, startups reclaim CBDs
While the verdict is yet to be out, an increasing number of startups are reclaiming their position in the central business districts which they lost out due to rising operating costs as against a large conglomerate that can afford to operate out of CBD. However, a shift in occupier profile has been witnessed over the last few years as corporates are diversifying in SBDs and smaller cities to stay closer to where employees are, whereas startups are increasingly relying on shared workspaces to continue in CBD areas and reap its benefits in the form of it being the primary source of employment in a city.
Furthermore, CBDs enjoy better connectivity and transport options making it easier for employees to commute and reduce travel time, which has become a point of contention for employees. Having the presence of startups in CBDs play a pivotal role in attracting and retaining talent while ensuring the company’s continued growth.
Over the next few years, what redevelopment of residential projects has done to major metros, opening up space for more to reside in the limited geography, shared workspaces will play a similar role in making CBDs available to businesses of shapes and sizes in an affordable manner while retaining the essence of Grade A office properties. This assumes significance as new-age businesses will be at the forefront of building a $1 trillion dollar economy and its imperative to provide them with the necessary support and cushion in building their product and services, something which shared workspace providers have been able to solve.