By: Manu Sharma
1st of the series
Track2Realty Exclusive
Small & Medium Enterprises (SMEs) have come a long way from being seen as mere start-ups. Track2Realty finds that in terms of growth rate they are catalyst to the economic activity and a key demand driver of office space absorption.
Anybody who thought SME stands for small and medium enterprises should do a realty check, if not reality check. If their rate of growth and office absorption capacity is any indication, SMEs in India are emerging as the key demand drivers of the commercial real estate. No wonder, realtors have big plans targeted for them. The trend of SMEs occupying more office space than even the large corporate is expected to continue in the year 2012 as well.
Facts speak for themselves. The trends in the office space consumption clearly suggest how the developers have woken up to the reality that they have to deliver where the demand is the most. A research by Regus says that 32% of smaller firms intended to increase spending on property and premises compared to 25% of mid-size firms, and 28% of large firms. The realtors admit they have seen a high demand for commercial offices from the SME segment.
This growing shift of commercial real estate to suburbs can be attributed to the larger office space available at comparatively lower rentals, and superior amenities that the commercial towers in suburbs provide. Also, in the metro cities minimized travel time from place of living and avoiding heavy traffic congestions is an added advantage that a suburban office space offers.
After all, what the SME sector wants in office is an infrastructure ready, on-demand office space that they can use. That way, they can focus their energy on their core offering as opposed to worrying about rentals, furniture, infrastructure etc. The moot point is whether a city like Mumbai which ranks sixth in the list of the world’s most expensive office locations in 2011, as per the global realty consultant Cushman & Wakefield, can be expected to plan holistic office space for the small and medium enterprises.
Marathon Group has introduced small office spaces under the special brand Small Business Spaces (SBS) a couple of years back at ‘Marathon Innova’, in Lower Parel. Mayur Shah, Managing Director, Marathon Group says they have received an encouraging response from the SMEs for this product so far.
SME cluster seems to be a winning proposition in tier-II and III cities where land cost is less. The question is why will a developer get into such project in metro cities where high land cost is a catalytic factor to look for better ROI?
…..to be continued
