India’s commercial real estate was adversely impacted due to the pandemic. The booming office-leasing segment was threatened by the Work-From-Home trend due to the lockdown imposed by the government to curb the spread of the virus. However, the absorption of the commercial spaces picked up as the curbs were lifted. With the vaccine roll out and full unlock just around the corner, the latter half of 2021 will see a complete return to the normal. Developers will prefer having a robust portfolio of properties with an aim to prioritize locations closer to populated hubs.
The 15-minute neighbourhood
With the rise in population, expanding city limits, commuting has become a serious hassle for many people. As per a report Indians spend 7% of their day commuting to the office, one of the highest in the world. This issue has given rise to the 15-minute neighbourhood wherein people live in close proximity to their offices. Urban centres like Bangalore, Pune, Mumbai, and Hyderabad are witnessing an increase in this trend since these cities face the worst traffic congestion in peak hours.
Creation of new business hubs
The current CBDs are getting overcrowded, saturated, higher cost, and old structures. The creation of new business hubs has changed demand dynamics for residential as well as commercial real estate segments and impacted their pricing positively. This has led to the mushrooming of residential hubs around these areas as people look to cut down on their commute time.
Satellite offices
The concept of a satellite office is picking up in the wake of the pandemic, and travel restrictions. More and more companies are looking to set up a branch office outside the primary CBDs to make it easier for their employees to reach the office in the wake of long commute time to the main office. This has led to an increase in demand for office space in other micromarkets. The trend has also led to an increase in demand for residential real estate in adjoining areas.
Micro-markets
Factors like availability of grade-A multi-tenanted buildings, proximity to high-density residential locations, and straight forward access by road have contributed to the expansion and creation of micro-markets. While the occupiers are on a wait-and-watch mode in terms of implementing their land strategies, a boost in demand within the next few quarters is predicted to occur on account of the expansion of IT and ITes companies, increased FDI and make in india initiatives which could lead to the rising popularity of flexible office spaces. Micro markets are witnessing a rise in demand for commercial land as people would not want to travel farther from where they live.
Moving forward, it’ll be important for commercial real estate developers to track the changing consumer trends and evaluate their tenant’s business profile to ensure they deliver on their changing needs amid varying economic conditions.