Startup Investment in Office Spaces: A Good Sign for Commercial Real Estate

Startup Investment in Office Spaces A Good Sign for Commercial Real Estate'

India’s startup boom has significantly contributed to the commercial property market zones, leading to a dramatic rise in the absorption rates of office spaces. Ascribed by entrepreneurship synchronicity and a healthy financial boost, the startup ecosystem has appropriated around 30% of gross office leasing activity in 2022, showing remarkable growth footprints for 2023, as per a report by JLL-India. In the first half of 2022 alone, diverse startup portfolios acquired over 6.97 million sq ft of office space.

The pro-startup orientations taken up by the Government of India like the Startup Seed Fund, Startup India Initiative, and Aatmanirbhar Bharat App Innovation Challenge marked the outset of the halcyon period ahead for startups. India is home to over 82,000 organisations and has been categorically affirmed as the third largest startup ecosystem, after the US and China. Gauging the current statistics, startups are projected to be the largest consumers of office spaces in India. The commercial real estate sector which has been off to a great start post the rollback of Covid-19 restrictions has majorly gained from the increasing demands of startup initiatives, especially those who are investing in mixed-use projects, IT/ITes, Shop-cum-Office spaces, and organic office space establishments.

Talking about the most preferred locations for office space expansion, Bharat Kumar, Director, Spaze Group, said, “Dwarka Expressway in Gurugram has emerged as a top-marked office location for start-ups. Most of them are heavily investing in Shop-cum-Office projects. It has become an enterprising commercial real estate market trend during and post-Covid. Startups want to establish their office base in well-connected corridors which offer smooth accessibility and are also traceable from any corner. The Gurugram section of Dwarka Expressway is set to open in 2023 and the news of its opening has amplified the real estate value of the region. Startups have become major consumer markets for office spaces, which are in high demand post the return to work-from-office set-up.”

Nayan Raheja, Raheja Developers, said, “As the world is waking up to a post-Covid era with the return of normalcy and rise in demand of real estate, startups have become the largest consumers of office spaces in NCR. Marked by robustness and a vision to expand, innovate, and recreate, start-ups are pegged to the major office occupiers in the coming years. The recent push towards infrastructural connectivity has also led to the launch of many commercial projects in new corridors. Startups are looking at it as prime opportunities for investment to broaden their reach, accessibility, and brand name.”

The comparative year-to-year analysis also brings an important fact to the forefront. The gross leasing expansion of startups has grown from 17% in 2021 to 28% in the first half of 2022. The lay-offs and restructuring programs undertaken by IT wealth markets have also diverted a vast talent pool towards startups, which has levelled up their fiscal and talent retention immunity. The NCR region has emerged as the most preferred hotspot for investment in office spaces for startups.

Sumit Agarwal, Director, Sales & Leasing, Bhutani Grandthum, said, “Grade A office spaces are in high demand in the commercial real estate market. Startup companies form a major chunk of it are aggressively investing in Grade A office spaces as a part of their scalable expansion plan and agenda. Office spaces nowadays are developed with high-end amenities and maintenance facilities which are cherry-picks for any startup organisation. Most startups have shifted from remote working to an onsite model of functioning and are pooling in their resources to establish workstations in prime corporate zones.”

Sharing similar thoughts, Ajendra Singh, VP, Sales & Marketing, Spectrum Metro, said, “Noida and specifically parts of Central Noida have become the most friendly zones of investments in office spaces. The region has seen an upscale in commercial real estate infrastructure and therefore has caught the attention of startups. It shares proximity with various parts of Noida, Greater Noida, and South Delhi. Investing in the region would allow startups to stand a better chance of attracting cross-regional talent. It would help them to get better visibility as it is centrally located. Most startups have switched to hybrid or physical working models and have chosen to expand in new regions.

Co-working office spaces are also getting quite popular. They are coming up as feasible modes of investment for new startups which are at the early stages of development. Gurugram is also seeing a windfall in demand for office spaces, primarily leased out to startups. The commercial real estate sector, which had undergone a stultifying period during the pandemic, is also seeing a refreshing office leasing demand from startups.

Source : FE

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