2021 will see rise of many prominent commercial micro markets, satellite offices: Krish Raveshia-Azlo Realty
BY--Krish Raveshia, CEO, Azlo Realty
2020 has been quite an eventful year for the commercial real estate segment. The leasing activity was affected negatively as the pandemic hit India and forced companies to shift their workforce to Work from Home. This led to a 36% decline in leasing activity in H1. Businesses incurred losses due to lockdown, which forced them to renegotiate rentals which affected rental yield.
The pandemic forced developers to adapt to the digital route to reach out to their prospective clientele. Sales and marketing strategies well-aligned digitally not only helped save cost but ensured optimum and targeted reach. In the post COVID era, the layout and design of the offices will change. The requirement will be spacious offices, seating arrangement, and layout where social distancing is possible.
The work from home trend was perceived as a potential risk to commercial real estate. But, with the government's unlock measures, allowing offices to work at a certain threshold kept sentiments in check. Commercial real estate, office space agreement term is long-term in nature and a few quarters of disruption cannot lead affect it in a big way. Work from home can only be a transient phase at best, face-to-face meetings with clients, interaction amongst employees cannot be replaced by virtual means for a long time. Till now the key occupiers of office space were IT, BFSI, and Manufacturing, expect start-ups, co-working, and data centres to lead demand going forward.
The new year 2021 will see the emergence of many prominent commercial micro markets, satellite offices as the existing CBDs get overcrowded and costly. The focus will be to deliver an exponential experience to tenants with wellness at the forefront. With economic activity picking up, we expect prices to firm up in the next few quarters, a rise in rental yield.
The government's call to businesses to set up facilities in India, offering PLI schemes to help become a self-reliant economy will provide a boost to the economy, lead to investment flowing in from overseas.
If the year 2020 was about recovery, 2021 will be all about growth. Most adverse development is behind us, with the government making a robust plan for nation wise vaccination. The pick-up in economic activities will help growth in most sectors of the country.
(Azlo Realty is a Mumbai-based real estate firm working on both residential as well as commercial projects, especially on built-to-suit facilities and contracting and infrastructure projects. It is part of Raveshia Group.)