India’s office realty space offers enormous growth prospects for office interior fit out companies. But the big game is not everyone’s cup of tea.
- India’s growing economy and increasing business investment is driving a surge in demand for modern office space across the country.
- This growth in office leasing presents a plethora of business opportunities for office interior fit out companies.
- Corporate workspaces are undergoing unprecedented disruption due to dynamically evolving expectations of the office market.
- Understanding these changing trends and what’s driving them is critical for companies looking to succeed in the market.
Over the past few years, India’s investment attractiveness has improved dramatically on the back of strong GDP growth and conducive policies for improving the business environment. This is fueling a steep surge in demand for office space in the country.
According to a Jones Lang LaSalle (JLL) report, office leasing in India for the year 2018 grew by 16% yoy to cross 33 million square feet, and is expected to exceed 39 million square feet by 2020. Moreover office leasing was once dominated by information technology companies, but the trend is now changing. Other sectors like BFSI, consultancy, telecom, healthcare, biotech, real estate, e-commerce and co-working space providers are also growing their share. MV Harish, MD, PDS, JLL asserts:
“The corporate interior design industry is primarily driven by the commercial office space absorption…Pan-India office market is likely to see healthy completions of between 38-45 million sq. ft. every year, starting from the year 2018 till 2020.”
One of the most exciting trends transforming the office realty segment is the rise of co-working spaces. They have shown an exponential increase in absorption from 1.11 million sq ft in Q3, 2017 to 3.44 million sq ft in Q3, 2018. The share of co-working spaces in total office leasing increased to 10% in 2018 compared to 5% in 2017. And the trend is no longer limited to start-ups and SMEs; even large corporates are driving demand.
The dynamism and growth momentum in the Indian office realty segment provides enormous opportunities for office interior fit out companies. A number of major players have expanded their India presence to cater to this growing segment. Clients are on the look-out for turnkey solutions that can be accomplished in minimum time. So they favour complete fit out services.
Source: JLL India, DKODING Intelligence
Refuelling the demand for professional fit outs
The India Office Fit Out and Facility Management Market Outlook 2020 by Global Infrastructure Facilities and Project Managers Association (GIFPMA) estimates that India’s office fit out market will reach a size of US$ 2.6 billion (over Rs 17,240 crore) by 2020, with a CAGR of 10% during 2015-20.
The southern region has the largest share of 40% due to high office land absorption rate in Bengaluru and Chennai. Office space also corners 65% of the Indian facility management services market owing to growing commercial activities in Delhi/NCR, Mumbai, Chennai and Bengaluru.
Real estate investment and services firm CBRE estimates the size of the Indian facade industry at around Rs 15,000 crore and growing at a CAGR of 20%. Gurjot Bhatia, Managing Director, Project Management Group, CBRE, shared his thoughts with DKODING Newsline:
“The need for sustainability, comfort and aesthetics continues to drive innovation in the windows, doors & facade construction sector. Recent reports have pegged the Indian facade industry to about Rs 15,000 crore and growing at 20% annually.”
Another strong indicator of growth in the office interior fit out industry is the size and potential of the office furniture market. A report by Technavio projects that the office furniture market in India will grow at a CAGR of 20% to reach US$ 13.58 billion by 2021.
The Gen-Next workspace
Office interior design is fast evolving according to the needs of the modern workplace with concepts like flexible seating, open & collaborative workplaces & lounges, glass design furniture, privacy pods, multi-purpose furniture, etc. Traditional concepts like demarcated departments, permanent seating and cubicles are now on their way out.
Varun Sareen, Director, Spaineo Home, affirms that there are definite winds of change in the office interior fit out industry as he opines to DKODING Newsline:
“I feel design has never played a more integral role in the success of a business as it does today. The trend towards office optimization is forecast to increase exponentially as we head into 2019 and beyond.”
Some of the key trends transforming workplace design in the present milieu are as follows:
Rise of millennials: By 2020, millennials are expected to account for around 50% of the global workforce. Around 78% of millennials view workplace quality as critical while choosing their preferred employer according to a CBRE report. The entry of millennials is driving transformational change in workplace design. Following are six of the aspects considered critical by millennials in the workplace:
- Collaboration & teamwork
- Innovative office space
- Visual adaptation
- Workplace flexibility
- Highly tech-savvy
- Team desk and brainstorming areas
Source: JLL India, DKODING Intelligence
To address these needs, offices are bringing in unconventional designs and fun elements like yoga mats, board games, bean bags and multipurpose furniture. The focus will be on keeping the work environment comfortable and stress free.
Startup ecosystem: The rapid increase in startups and SMEs is fueling demand for dynamic co-working spaces that can be adapted to both periods of growth and downsizing phases. Knight Frank India estimates a saving of 5-15% per seat in co-working spaces compared to standard lease, making them more suitable for startups that are generally not cash rich.
Manav Goel, MD, Woodkraft India Ltd spoke to DKODING Newsline:
“The growing number of startups is a major driver of change, as startups are bringing in a welcome disruption in design concepts. In fact, even established companies are now showing interest in embracing the modern workplace.”
India had nearly 200 co-working operators handling 400 shared workspaces in 2018, in comparison to just Regus along with a few players in 2010. In Q1 2018, Bengaluru, NCR and Hyderabad accounted for the maximum share of co-working spaces at 43%, 16% and 15% respectively.
Workplaces for startups have to adapt to their unique requirements. These include:
- Flexible design like operable walls to create/close open spaces as required.
- Variety of environment options to break monotony and perform different roles.
- Common spaces for employee bonding in startups.
- Smart technology to streamline processes and automate tasks.
- Space optimisation by transitioning from the ‘cabin culture’ that takes up 160-175 sq ft per person to open offices that go down to 50-65 sq ft per person.
Technology: Office spaces are increasingly incorporating latest technologies in tune with the evolving times and needs of employees. Smart technologies like mobile devices (BYOD), IOT and remote location access are being leveraged. Some of the ways in which technology is enhancing employee experience, efficiency and productivity are as follows:
- Interactive screens for meeting room management
- App-based desk booking and food ordering from pantry
- App-based reservation of parking space
- IoT mapping of usage of desks and meeting rooms for optimal space utilisation
- Leveraging IoT for monitoring and improving air quality
- Voice-activated solutions at the work desk, in meetings, IT & operations management and also for skilled professionals
- Smart lighting, temperature and ambient controls according to the unique needs of each employee.
- Virtual workplaces with VR headsets, virtual mouse and keyboard, avatars, 3D visualisation and telepresence.
Source: JLL, DKODING Intelligence
Emerging best practices: New practices like Building Information Modelling (BIM) are creating new value for players in the Indian architectural, engineering, construction and facility operations (AECO) industry. BIM is a collaborative way of working underpinned by digital technologies among industry stakeholders across the project life cycle that allows for more efficient methods of designing, delivering and maintaining physical built assets.
Implementation of BIM technologies and workflows can reduce the initial cost of construction and the entire life cycle cost by up to 50%, reduce greenhouse gas emissions in the built environment by up to 50% and reduce overall completion time by 50% for new build and refurbishment assets.
With massive investments in Indian AECO projects, it is essential to leverage BIM technologies and workflows by adopting standardised procedures.
Resimercial: Offices like Airbnb have inculcated a home-like environment for their employees with the induction of resimercial design, which is making waves nowadays. This has become important because employees often work for long hours and even over weekends.
Millennials are used to performing varied job functions and detest monotony. They also engage with co-workers like extended families, further strengthening the case for resimercial design. Companies are adapting concepts of the drawing room, living room, study and game room to make their employees literally feel at home.
With the changing trends in the market, office interior fit out firms will have to adapt quickly or risk getting left behind. Amidst this competitive landscape, skilled workforce is low in availability and has to be in tune with the changing trends. This serves as a major entry barrier for new players in the office interior fit out market. In addition, the market will reward those players who are able to adapt to the changes in technology as well as cater to the needs of the growing millennial workforce in the country.
- Corporate interior firms are facing a changing office landscape in India, led by the rise of non-IT occupiers like BFSI, biotech, telecom, e-commerce and co-working service providers.
- With the increasing number of startups, office interior design concepts are transforming like never before, with more open spaces, flexible designs, futuristic technology and optimal space utilisation.
- Due to the growing numbers of millennials in the workplace, offices are embracing unconventional and fun elements while keeping the environment relaxing and stress free.
- Skill acquisition and adaptation to changing customer needs are key challenges for players in the office interior fit out industry going forward.