NEW DELHI: Several businesses, both Indian and foreign, are using the slowdown in the office real estate market to relocate their offices to locations where all their businesses can come under one roof and that too at lower rentals.
According to a Cushman & Wakefield study, office relocations and consolidation of space have more than doubled in the first half of 2013 against last year and companies have managed to reduce their rents substantially.
"Many companies are opting for relocation and consolidation of office spaces which brings in economies of scale and better efficiency. They could also reduce their rentals by 25-50%," says Sanjay Dutt, executive managing director of South Asia at real estate services firm Cushman & Wakefield.
Real estate firm SARE, for instance, recently leased a new office building in Gurgaon where it now has 26,000 sq ft of usable area compared with 15,000 sq ft that it was using in two different offices that were about 20 kilometres apart - one in Delhi's Nehru Place area, and the other in Gurgaon.
"We have been able to reduce our per sq ft rental cost by around 50% and now it takes care of our growth for the next 3-4 years," says Vineet Relia, chief operating officer at SARE. They have also got better work spaces as it is a new building unlike the Nehru Place building, which is old. Relia says since leasing is generally slow at the moment, good spaces were available at comparatively lower rentals.
Earlier this week, multinational HR firm Aon Hewitt signed up a large lease deal with Unitech for 800,000 sq ft of space at its Infospace Tikri
SEZ in Gurgaon where it will consolidate four of its offices in Gurgaon into this one by early next year, bringing in substantial cost savings.
According to Cushman & Wakefield data, Inmobi leased 111,000 sq ft of office space in Bangalore's ORR moving from Domlur. In Mumbai, Johnson & Johnson took up 150,000 sq ft in Andheri East moving from more expensive Worli. In the NCR, Oriflame took up 40,000 sq ft, moving from Connaught Place to Jasola.
"Market rentals are low today but are on their way up," says Vivek Dahiya, chief executive officer of GenReal Property Advisers, a property consulting firm, pointing out that this is a good time for companies to consolidate their office space. "Companies today are willing to go a little farther away to achieve cost benefits," he says.
The office market in India has matured considerably over the past 15 years since the boom began. In these years, though, geographical dynamics have changed quite a bit. In many areas like the NCR and in Mumbai, city centres have moved over the years.
In the NCR, Connaught Place is no longer the prime central business district that it was a decade back with action shifting to other locations like Gurgaon and Noida.
Source : economictimes.indiatimes.com