Although Work from Home (WFH) has become a new norm during COVID-19, many companies don't see it as a long-term viable solution. Surfaces Reporter has covered companies that are planning to expand their commercial real estate portfolio contrary to the beliefs that the demand for office space will come down because of work from home culture (WFH), which is sweeping across the corporate sector.
While the world is moving towards making Work From Home (WFH) a permanent feature, Tata Reality thinks otherwise. It would build 45 million sq ft of office space over the next 7-10 years!
“Demand for quality A grade office space is intact, while there is a shortage of supply," said - Sanjay Dutt, MD & CEO, Tata Reality
He further added that the recent situation is similar to the global financial crisis, even during that time also the company managed to take up 19 million sq ft of office space. According to him, “This year, between January and June around 11 million sq ft of commercial space has been committed and I believe another 10 million sq ft plus will be committed in the rest of the year, which means 20 million sq ft — despite lockdown and concerns around WFH will still get committed in India, especially when there is no supply, which is great.”
The company has already set up and kept on lease around six million sq ft of office, while the construction work of another one million square foot office in Gurgaon will be finished by November.
Dutt said that the company has already got the approval for another 1.3 million sq ft of commercial space in Mumbai. The construction work will start there as soon as the lockdown situation improves.
With a robust residential portfolio and most of its commercial real estate is on lease, the company has still not stopped residential launches and looking for more commercial space. As per their report, the company is receiving almost 100% of lease rentals. And their rental amount has increased by almost 14.8 percent by the financial year 2020.
Dutt clears that some proportion of workers will continue to work from home for some time or perhaps permanently, but the magnitude of WFH is limited by factors such as infrastructure problems, organizational culture problems and data protection issues.
Apart from Tata Realty, many other big technology companies have also resumed discussions about buying and leasing office spaces.
Despite lockdown, the $ 16 billion Paytm has also set up a 5.5 lakh square foot campus in Noida that contain two towers. There are a total of 21 floors and 5000 seats that promise to accommodate its growing team while maintaining social distancing in place. The company has moved its Paytm Malls operations to Bengaluru and is also taking up a 1.5 million square feet space in the city to house its eCommerce business. The engineering units of Paytm will be accommodated there.
It is under the expansion plan of Microsoft to lease around 1.3 million square feet office space in Bengaluru. The firm occupies almost 0.5 million sqft with Prestige estates.
Intel is planning to lease 1 million sqft commercial space. Intel has a big campus of its won, along with some leased property.
American PE fund Blackstone is planning to buy two commercial office towers in central Delhi from PE fund Red Fort Capital and Parsvnath Developers for Rs 550 crore. These two towers near Connaught Place on Bhai Veer Singh Marg have almost 300,000 square feet of space, much of which has been leased to AXIS Bank, Aditya Birla Group, SBI and Regus.
EY- India and RMZ
Tax and consulting company EY has signed a deal to lease 3 million sq ft. Besides, Office space developer RMZ also closed deals, figuring 1.6 million square feet across Bengaluru, Chennai and Hyderabad during the lockdown.
At this time, many companies like Ola, Oyo, Zomato, Uber and Swiggy have laid off thousands of employees due to non-conducive business environment, and have given up almost 10 percent of their real estate space for lease.