by Priya Jadhav
· Total Grade A office stock in the top 7 cities in India is 592 mn sq ft
· Bengaluru, Mumbai and Delhi NCR constitute 379 mn sq ft of Grade A office space of which 105 million sq. ft. qualify for upgradation
· The newly developed buildings are better than their older counterparts in aspects like human experience, sustainability, operational efficiency and costs, technology, community, wellness, safety and compliance
· The older buildings will need to undergo upgradation in order to keep up with the ever changing occupier needs
· Upgradation is likely to help the investors retain clients, increase rentals and enhance asset value
Mumbai, March 17, 2020 – The top three real estate markets in India have 379 million sq. ft. of Grade A office space with nearly 105 million sq. ft. being a decade old. The older stock faces the risk of relatively higher attrition of occupiers and lower rents says the findings of JLL’s report titled “Futureproofing 2.0 - Upgrading commercial assets to create lasting value,” released today.
More than 20 million sq. ft. of new commercial office supply is added every year in the top three markets of Mumbai, Delhi NCR and Bengaluru, where the new supply comes with greater operational efficiency and better human experience, pushing the older stock to the brink of obsolescence.
“Often, this trend can even reduce the attractiveness of entire submarkets, as in the case of the traditional Central Business Districts (CBDs) of the three cities under study. With limited land parcels restricting new development, finding relevant supply in these primary business districts is proving to be a challenge,” the report adds.
These three markets represent a huge investment opportunity from the upgradation of office spaces, highlights the report.
“In this era of change, the defining characteristic of today’s workplaces is continuous innovation. With a diverse working population spanning from baby boomers to “Gen Zs”, it is time to futureproof commercial spaces to meet the emerging needs of a demanding workforce as well as deliver on the community’s sustainability promise,” said Ramesh Nair, CEO & Country Head, JLL. “In addition, these urban regeneration and revitalisation projects go a long way in re-building a city’s urban character,” Ramesh added.
Investment opportunity of INR 5,500 crore yet to be seized
The need to refurbish office properties presents a massive opportunity, spelling a potential investment of INR 5,500 crore for upgrading ageing assets by
For asset owners, upgradation based on user preferences and technology infusion will be a critical element in a building’s lifecycle management in the near future. The question is no longer ‘if’ we should but ‘how soon’ can we do this,” said Harish MV, Managing Director & Head, PDS (Project and Development Services), JLL.
Human-centric design at heart of upgradation
In a rapidly transforming real estate landscape, upgradation showcases buildings at their best and ensures that they evolve at the same pace as human preferences. With workforce requirements changing at a rapid pace, every building that is planned will have to follow an active building lifecycle management and take into account upgradation of the asset to keep it relevant in the market.
While age of the building is one of the measures for identifying the need and potential of upgradation, increasingly we will witness a trend of newer buildings also undergoing or planning for upgradation to keep up with evolving trends in the market.
Upgradation of a building includes components
The report further deep dives into the upgradation potential of prime office districts across the top three cities of Mumbai, Bengaluru and Delhi NCR.
About JLLJLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management, headquartered out of Chicago. A Fortune 500 company with annual revenue of $16.3 billion, JLL operates in over 80 countries and a global workforce of more than 93,000 as of September 30, 2019. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, please visit jll.com.
In India, JLL has an extensive presence across 10 major cities (Mumbai, Delhi NCR, Bengaluru, Pune, Chennai, Hyderabad, Kolkata, Ahmedabad, Kochi and Coimbatore) and over 130 tier II & III markets with a cumulative strength of close to 12,000 professionals. Headquartered out of Mumbai, we are India’s premier and largest professional services firm specializing in real estate. Our services cover various asset classes such as commercial, residential, industrial, retail, warehouse and logistics, hospitality, healthcare, senior living, data centre and education. For further information, please visit jll.co.in