As the economy starts to open up after the second wave of the COVID-19 pandemic, the commercial office space market in the National Capital Region (NCR) is witnessing a rise in demand, with organizations choosing developer owned grade A+ buildings as their next destination – a very notable trend of ‘flight to quality’, accelerating post the pandemic.
Requirement for spaces is also set to increase with social distancing now becoming the new norm, along with technology-led workplaces. India’s net office absorption stood at 5.85 million sq. ft in Q3 2021 (July-September), a jump of 48% when compared to the previous quarter, and an 8% Year-on-Year (YoY) growth in major cities, according to JLL’s Office Market Update-Q3, 2021.
Delhi-NCR recorded the highest net absorption amongst 7 cities in Q3. The national capital region is one of the most populous urban clusters in the world and boasts of the second highest per capita income in the country. It attracts one of the highest Foreign Direct Investments pan India. It’s a combination that inevitably attracts infrastructure upgrades, a convergence of talent, and therefore, robust demand for office spaces.
Source: https://www.archdaily.com/906605/the-20-largest-cities-in-the-world-of-2018
Max Estates is leading the charge in building the future of work in the NCR market. With Grade A+ LEED and IGBC certified premier office developments, Max Estates is providing quality workspaces across Delhi NCR through their flagship project Max Towers on the Delhi-Noida border, their prime development Max House in the heart of South Delhi, and their upcoming commercial space Max Square, on the Noida-Greater Noida Expressway.
The second half of 2021 is bringing new opportunities to Indian commercial real estate, with NCR leading the recovery. The most important trends likely to shape office spaces in NCR in the coming years are:
Improving Investment Ecosystem for Corporates
Infrastructural Upgrades – Positioned for rapid development and upgrades, Delhi-NCR is witnessing a massive influx of investment in infrastructure.
The NCRTC (National Capital Region Transport Corporation), a joint venture company of the states of Uttar Pradesh, Haryana, Rajasthan, Delhi, and the Government of India, is implementing the RRTS (Regional Rapid Transport System) project across NCR to provide comfortable and fast transit to NCR towns and meet the high growth in transport demand.
Source: NCRTC Website
All three corridors of Phase I will converge at Sarai Kale Khan and will be interoperable which will provide seamless movement.
Expansion of roads such as the Urban Extension Road in Delhi, the SPR-GCER development project in Gurugram, and the FNG expressway in Noida are further set to boost ease of access and connectivity. The proposed expansion of the metro corridor from old Gurgaon to new Gurgaon, Gurgaon to Manesar, and Faridabad to Gurgaon, will in turn enhance connectivity via metro-rail, reduce reliance on private vehicular traffic.
Increasing developments in transport systems and a wider range of connectivity across NCR in the future will enable workers in the CRE (Corporate Real Estate) world to quickly travel and access offices and is contributing to the rising office demands in the NCR.
The largest unicorn hub in India – Emerging as a staunch competitor to Bengaluru, the start-up capital of the country, Delhi-NCR has witnessed substantial growth in funding for startups over the past few years.
Source: Inc42 Plus
Delhi NCR also has a higher number of unicorn startups in India with organisations such as Paytm, Zomato, Oyo, Lenskart, Grofers, Makemytrip, and many more choosing the national capital region as their base.
Additionally, there is an increasing need for affordable and excellent co-working spaces in Delhi-NCR, with a need to innovate and grow operations of start-ups, along with pooling in technical talents from all places, further contributing to the acceleration in demand for quality, and flexible workspaces.
The growing startup ecosystem in Delhi-NCR will act as a catalyst for innovation, employment and faster technology adoption as well, further attracting investment and infrastructural upgrades.
Changing Commercial Real Estate Dynamics within NCR
From Consolidation to Hub & Spoke Models for Corporate Occupiers – The return of employees to physical workspaces is playing a crucial role as several organizations are revisiting their work models. Organizations are looking to expand their geographical diversification, and several conglomerates are also exploring the hub and spoke model, with the aim of reducing the distance between employees’ home and the office. This redistribution of demand has yielded an advantage to Delhi NCR.
At Max Estates, we have adopted an agile approach to the new hybrid model of work, and the renewed requirements that come with it. With the changing role and purpose of offices in the new normal, we have attempted to create holistic spaces with a suite of amenities including sports facilities, retail avenues, restful places for recreation like meditation rooms and herb gardens, and more, to ensure all our tenants’ needs are catered to within a single ecosystem.
For example, at Max Towers in Noida, the office space is designed to address the future of work, with the highest level of air filtration and sanitation, and the integration of an al-fresco cafeteria, and amenities including open-air cricket cage, badminton court, meditation room, early learning centre, fitness hub, food and beverage outlets etc., paying homage to Max Estates’ philosophy of WorkWell.
Noida emerging as equal counterpart to Gurgaon in office space leasing – Noida has been consistently outpacing Gurgaon in terms of office leasing since April-June 2020 quarter. In Q1 2021, it accounted for 55% of net absorption vs. Gurgaon at 38%. In addition to improved metro connectivity, better road infrastructure and rise in supply of Grade A+ quality office space, it also is gaining significant traction with respect to housing launches and demand. Approval of India’s biggest airport and Film City, investment by foreign companies in data centres and one of the biggest IKEA’s upcoming retail destinations has pushed the residential real estate market of Noida, which was subdued for nearly a decade and is re-enforcing the office demand with corporate occupiers looking to diversify office footprint to be close to where talent is.
Future of Work in the New Normal
Hybrid Model of Work – Since the start of the Coronavirus pandemic, the number of people working from home has increased exponentially, with both boons and banes of the remote working model being experienced by the workforce. Employees are now yearning to return to a new and improved workspace that allows them space for interaction while keeping their safety in mind and allows them flexibility in the working environment.
According to a report on the Future of Work published in January 2021, “around 66% of survey respondents in Asia-Pacific intend to allow remote working for no more than one or two days per week. This will create a hybrid workforce based in a physical office. According to a Microsoft India’s Work Trend Index, 73 percent of business decision-makers are considering redesigning existing workspaces to better accommodate mixed work environments.
In our view, work from office will continue to be core to the hybrid workplace ecosystem though the role and purpose of the office will significantly evolve and hence its design and confluence of spaces within it.
Role of Technology – Technology will play a crucial role in facilitating a new “phygital” working experience enabling employees to seamlessly switch between onsite and remote locations. Use of tech-based interventions also helps enhance safety measures at the workplace, the need for which has been emphasized greatly after the pandemic. Innovative technologies like robot receptionists, parking applications and services, smart meeting rooms, and wireless AV systems are driving the future growth of commercial office workspaces in the country.
For example, at Max Estates portfolio of office assets, we have partnered with real tech players like Clarico to enhance Air filtration, Wobot to monitor adherence to Covid Protocol through AI enabled video cameras in common areas and Smart Joules to enable energy efficiency by optimally utilizing functioning of building equipment like Chillers.
Evolving Office Design – A large proportion of businesses are trying to focus more on workspaces that emphasize team interaction for effective communication, and therefore are likely to redesign and repurpose office environments for better working conditions, creativity boost and flexibility. Offices have now moved beyond the conventional idea of a standard brick and mortar building to a new, modern, and sustainable ecosystem that cares for you, and your holistic well-being – both physical and emotional.
Max House, Okhla, New Delhi
Capex Light Model – In the last few years, many organizations and companies have opted for leasing commercial properties instead of buying them. With purchases being a lumpsum investment that are often expensive, companies are starting to lease or rent office spaces in NCR to reduce capex, and instead adopt a flexible approach which enables them to partner with quality developers.
Even while renting out office space, corporate occupiers are looking to partner with developers with strong balance sheets who can provide ‘Design to Build to Invest’ – an end-to-end service fully customized to their taste and needs. At Max Estates, we provide ‘Zero Capex’ office leasing solutions, which in turn also has been a big differentiator when it comes to clients choosing Max Estates as its partner for the new office.
Offices are inherently a fundamental part of corporate culture in the world, even though their role and function in the new normal is steadfastly undergoing a change. While focus on health and well-being is now paramount, a need has also emerged to curate space the configurations and ecosystem of amenities we provide to tenants. As a progressive developer, Max Estates has paid close attention to creating a unique confluence of spaces that enable collaboration, innovation and community, to combat the mental effects of the isolation that employees underwent due to the Covid-19 lockdown. Such office spaces, in our view, will lead the office absorption trend in future.
