The office after coronavirus
They are expected to focus on the distribution of core and flexible spaces in their premises and some might even want satellite offices or use a temporary hub, aiming to lower their capex and improve agility. Occupiers will take time to decide on long-term changes to workspace design such as the use of collaborative spaces, or using hot seats.
Developers might look at securing their entire assets, including completed properties and those under construction, by following strict sanitisation measures. Completing projects will take longer as the coronavirus
pandemic has affected the labour market and there are strict sanitisation norms for work. Delays may also arise due to unavailability of imported construction materials and equipment in the short term. Developers are expected to have strategies to handle future outbreaks of the coronavirus
disease in an individual building in a business park. It is anticipated that the measures they would undertake to combat the disease, like sanitisation and employee safety, would be linked to branding of their assets.
As diligence for the disease takes centerstage, developers and investors will also increasingly focus on making their portfolios resilient against not just environmental shocks but also pandemics. It is expected that “pandemic clauses” would be a part of all building resilience strategies in the coming future.
Most investors have keep commitments they made before the disease’s outbreak, as they step up due diligence of projects and developers. Investors will continue to collaborate closely with developers to ensure an effective implementation of sanitisation, security, wellness, sustainability and other preventive norms. Global investors would in fact implement lessons learnt from other markets to ensure a standardisation of measures across assets worldwide.
Commercial real estate is resilient
The appetite for sustainable commercial real estate
is expected to strengthen, especially for those looking at more stable rental revenues. Traction from private equity capital, especially in core assets, will strengthen further due to volatility in other segments. We also expect real estate investment trusts (REIT) to continue to gain traction, even though there will be greater scrutiny on quality of assets, sustainability elements and portfolio resilience.
While the commercial real estate market in India is evolving and the dynamics of the industry are changing rapidly, there is a need for corporate occupiers to plan for the future. Reopening of workplaces will require a clear focus on employee safety, sanitisation, technology, and restructuring among other changes. This may add to operational expenditure, but it will ensure that occupiers are prepared for disruptions.
Working from home run was a reaction to the nationwide lockdown to contain the coronavirus outbreak and it is unlikely to become a permanent concept in real estate strategies. This is due to challenges such as psychological impact on employees, data security, and monitoring productivity.
We expect demand for commercial real estate to remain robust and the sector to emerge resilient and inevitably reinvent itself.
(Anshuman Magazine is the Chairman and CEO, India, South East Asia, Middle East & Africa, CBRE. The views expressed in this article are personal)
Disclaimer: Views expressed are personal. They do not reflect the view/s of Business Standard.