July 7, 2012 12:35:50 am
An office space is critical to any companys growth as the workplace environment plays a crucial role for the employees. The quality of the physical workplace environment also has a strong influence on a companys ability to recruit and retain people.
Understanding the importance of work environment,companies are on the lookout for suitable office spaces that can keep their employees happy and in turn reap profits for the business. More and more companies in India are becoming very particular about office spaces,pushing the demand for Premium/Grade A Office Spaces. However,as property is often graded by the owner or broker instead of an unbiased source,it is not rare for an owner classify a Grade B building as Grade A to justify higher rents.
GRADING OFFICE SPACES
So how does one differentiate amongst the available office spaces? Office buildings are generally classified as being either a Grade A,B,C building. A number of factors including market perception,rent,building finishes,system standards and efficiency,location/accessibility and building amenities are used as measures to classify building types.
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Building amenities include services that are helpful to either office workers or office tenants and whose presence is a convenience within a building or building complex. It also includes the quality of materials used,hardware and finishes,architectural design and detailing and elevator system performance.
According to the Building Owners and Managers Association International,Grade B office spaces compete for a wide range of users with rents in the average range for the area,where building finishes vary from fair to good for the area. Similarly,Grade C office spaces compete for tenants at rents below the average for the area.
Grade A offices are usually new,recently developed or have undergone a thorough refurbishment. These offices are set in the heart of the city,positioned within easy reach of support resources like secretarial and business services. Practically speaking,a Grade A building can be identified by parameters like location,best-in-class facilities,elevator quantity and speed,power backup,security,parking and floor load capacity as well as premium add-ons like eating joints and recreational offerings in the vicinity.
In India,rents and prices of Grade A office spaces have skyrocketed in the past two years because of a supply shortage and soaring demand from aggressively expanding firms. However,the global financial crisis has tempered this price rise,and even caused values to drop in some areas.
In Mumbai,Grade A office rents are expected to grow by 1-2 per cent,with a marginal rental increase in 2012. Whereas in Delhi it is expected to grow by 0-1 per cent. Companies are expected to remain interested in office space in the secondary business district,even as the suburbs will continue to offer competitive rents.
According to a report released by CB Richard Ellis,the office market in Delhi-NCR is on a stable footing and none of the prominent micro-markets observed a dip in rental values. An oversupply in Gurgaon and Noida may exert pressure on values as occupiers look towards striking bargains to leverage the weak market sentiment. IT occupiers are expected to drive demand levels across most micro-markets in the region.
The author is MD,Assotech Realty
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