What work-from-home means for commercial real estate

Commercial real estate is considered a more lucrative and reliable investment than residential property. But the work-from-home culture sweeping across the corporate sector could change that.



“With so many people working from home, large companies are discovering that they don’t need so much office space,” says Anil Primlani, CEO of real estate consultancy Prime Associates.


Some of India’s top professional services firms and IT companies are considering surrendering a part of their rented office space as they look to implement work from home for employees even after the lockdown ends.


It is estimated that 15-20% of executives will continue to work from home. Apart from keeping employees safe, the move will also substantially reduce rental costs. Almost five lakh square feet of office space has reportedly been vacated in the past two months. Another five lakh square feet may be vacated by June end.


Some companies are cutting down more. Mid-sized NBFC Clix Capital which has nearly 600 employees — is planning to vacate half of its office space. “At least 50% of our staff will permanently work from home. It will help us give up about 40,000 sq ft of space,” says Pramod Bhasin, Founder, Clix Capital.


Though demand for office space will come down, it is not expected to crash. The need to de-densify office spaces to maintain social distancing would compensate for any possible dip in demand, according to Ramesh Nair, CEO and Country Head, JLL India. Companies are expected to modify their offices to suit new norms and guidelines.


Many employers will need to scale up the usable area for each employee. “We expect a surge in demand for redesigning office spaces to maintain and incorporate statutory guidelines or international standards and practices. Companies will make changes in their offices depending on their work-from-home policies,” says Tushar Mittal, Founder and Managing Director of SKV.


As more executives are required to work from home, there could also be an uptick in demand for bigger, more flexible houses. Real estate consultant Anarock says people will need functional and flexible homes with an ability to convert rooms into workspaces. “The product offerings may be redesigned by builders,” says a report by Anarock.


At the same time, the job losses and salary cuts are making people shift to smaller accommodations that fit into their pruned household budgets. “After the salary cuts, many people living in 3-BHK apartments now want to switch to 2-BHK flats or move to more affordable locations,” says Primlani.


Source: https://realty.economictimes.indiatimes.com/news/commercial/what-work-from-home-means-for-commercial-real-estate/76379046

June 15, 2020

11 views
Mindcept-Logo.png

© MINDCEPT CONSULTING

  • Black LinkedIn Icon

DISCLAIMER: The information contained in this website is offered for illustration purposes only and is general information. We make no representations or warranties of any kind (express or implied) with respect to the information, products, services, statements, figures, calculations, plans, images, logos, related graphics and are purely indicative in nature only. Whilst all reasonable care has been taking in providing all information, however, We or / and our related companies or/ and our representatives, consultants or / and our agents accept no responsibility for its completeness, accuracy, reliability, suitability or availability of any information contained herein for any action taken in reliance thereon by any party. Any reliance on information as contained in this website does not constitute an offer, inducement, representation, warranty or contract and may be relied upon at one’s risk and consequences.