Tenant’s preferences are moving from traditional brick & mortar space to space-as-a-service
Since outbreak of COVID-19 in early 2020, future of office is one of the most discussed and controversial topics in the conference rooms across the world. There are few points which are largely settled now including that the world is moving towards a hybrid workplace model and space-as-a-service would be the future of workspace and office space in coming years.
Why Space-as-a-Service is the new future of workspace?
Post three waves of COVID-19, India is looking towards a stable future of post pandemic period. Most of the companies have opened their doors to employees at least on an employee choice basis. Since February 2022, we witnessed sudden increase in demand for office space. First type of the demand is primarily driven by start-ups requiring ready to move space sized between 10,000 sqft and 50,000 sqft. This demand is catered largely by co-working spaces. Second type of demand is from traditional firms that floated RFPs for spaces sized between 2L sqft and 2 million sqft.
However, now the preferences of the tenants have evolved, and they are asking for swanky office parks with high amenities, efficient design, environment friendly practice, usage of technology and professional services. Therefore, office space is moving towards space-as-a-service. Smaller requirements are fulfilled by co-working and managed offices/flexible workspaces, whereas large tenants are also transforming the typical office parks to modern collaborative facilities more suitable for their workforce. Below we have listed key requirements preferred by large occupiers during site selection for office space.
Tenant’s preferences while choosing “Space-as-a-Service”:
1. Efficient & impressive design elements
Tenants are preferring office parks with higher efficiency floor plates, Iconic building design with large atrium, increased usage of glass in the façade enabling penetration of natural light and upscale façade treatment.
2. High on amenities
Taking the leaf from coworking and managed offices, tenants are giving lot of importance to available amenities including fitness center, gaming, varied F&B options (food court, fine dining, branded, kiosks, food trucks), Creche, medical facilities, ambulance, general stores (provisions, laundromat, concierge etc.), Amphitheatre, sports amenities, and clubs. Occupiers are also looking for common auditorium space to conduct large meetings.
3. Environment friendly developments
Corporates have started considering environment and sustainability in their evaluation. Hence tenants are stressing on selection of Green Certified Buildings at least LEED GOLD but Platinum rated is preferred. Integration of sustainability practices including green lease, green energy, conservation of energy and water, use of environmentally friendly products and building material.
4. Usage of technology
Tenants are seeking building automation through BMS system with ability to monitor equipment health and usage via developer BMS. Tenants are asking for efficient apps for communication, booking of amenities and other functions.
Post COVID-19, tenants are evaluating parks on availability of touchless features in high traffic zones, namely, toilets, cafeteria, entry/exit points and others. Tenants are also insisting on installing CO2 sensors for office floors for gathering information on air quality of the space.
5. High security infrastructure
Tenants are giving importance to security and increased usage of technology in this function is also in trend and preferred. CCTV security coverage is expected in the office campus regions and spaces in buildings including common areas, utility areas and critical rooms, parking areas and others. The centralized monitoring, turnstiles / flap barriers are part of the developer’s scope integrated with building access control system.
Existing and upcoming tech parks are increasingly using automation of security – boom barriers, automatic parking management, digital visitor management and record keeping.
6. Professional & Transparency in services
Tenants are encouraging usage of transparent and incentive-based CAM model. This model has defined KPI parameters established in terms of service level requirements. Based on the performance of the provider, the CAM charges include a subsidy / additional incentive.
7. Availability of Co-working/ flexible spaces
We are living in a dynamic period of history, currently most of the corporates are evaluating different workplace strategies. This aspect of uncertainty is driving corporates to look for available options of coworking in the tech campus. Also, many developers have established tie-ups with coworking operators or have built in house capability to provide flexible/managed spaces in their parks. In future, there is a possibility of managed office being preferred option to the tenants for varied sizes of space requirement.
8. Transportation facilities
Many developers are providing transportation facilities from their parks to nearest metro stations. This is appreciated by tenants, and they are opting this as one of the critical criteria for site selection if metro station is not available in walking distance. Office Park owners can partner with state transportation authorities to provide such facilities if possible or tie-up with private vendors for the same.
9. Option to purchase at pre agreed price
In last few years, tenants have opened-up to invest in real estate infrastructure in India. In the past, tenants invested only when land was allotted to them by the Government, otherwise they preferred mode was lease only. However, many established MNC’s are now looking to purchase their on completed spaces from developers at a pre-agreed price. This new trend is mainly on account of two reasons, firstly, many tech companies have high surplus cash and want to invest appropriately and secondly, India has become a matured location for MNC operations.
10. Partnerships & Flexibility
Few large corporates believe in partnership approach towards creating and operating a campus. In this model the corporate seeks a portion of benefits / gains achieved during sale / further leasing of project during the lease term, is offered back to the corporate in terms of rent rebates or other forms of subsidies
Currently, occupancy levels are still low in most of the large office parks. The return of workforce to office is still being debated among various stakeholders, it is important for existing office park owners to redesign their offerings to suit the changing needs and expectations of the tenants. There is a possibility of vacancy remaining high in coming years and the parks that can fulfil the needs and expectations of of the tenants would be better positioned to retain and attract new tenants to their parks.
Meraqi’s transaction advisory services provides a single window platform for end-to-end occupier focused services. We assist in strategic space planning, align workspace with client business objectives, transaction management including space leasing, acquisition/ disposition, lease management, renewals, and renegotiations.