Start-ups| Addressing the real estate challenge by Ram Chandnani, India Chapter Board Member, CoreNet Global and Managing Director, Advisory and Transaction Services, India, CBRE South Asia Pvt. Ltd.

​New Delhi, June 10, 2016: India’s start-up ecosystem ranks third in the world with more than 4,200 new-age companies, as per data from Nasscom. Bengaluru, NCR and Mumbai house nearly 65% of these start-ups,thereby stressing on the need to address the real estate challenges these emerging businesses will face. The social infrastructure within which they operate is critical to their sustenance. This includes several factors such as cost, space, location, design and flexibility which can have a significant influence on the type of customers and workforce it attracts. Corporate Real Estate (CRE) will play a major role in strategizing the business set ups to help start-ups stay relevant in the market.

The CRE strategy of a start-up can be varied and constantly evolving, according to the need and the growth stage that they are in. Most start-ups looking to set up a new office or expand their offices do not pay adequate attention to planning their real-estatein alignment with the long-term business strategy of their company. In the competitive start-up landscape, consulting a Corporate Real Estate specialist to identify the most suitable investment in a real estate asset will make a world of difference on their business profitability, especially in the long term. There are several aspects for a start-up to consider while defining and choosing to invest in a real estate asset:

Proximity to the city: Most start-ups prefer being located in the heart of the city. However, a large space within the city equals to large costs. Many start-ups rely on external funding to function and have limited budgets for their set ups. Therefore it is recommended that the office space should be set up in the suburbs, within the reach of the city and its amenities.Accessibility, provision of facilities and services, indoor environmental quality and flexible working are rated as some of the most important factors to employees.

Cost Control: Start-up operations can be uncertain in nature. Survival and profits may not always be a guarantee. Thus it is essential that real estate options are considered keeping cost control in mind. According to CBRE, the rental differential between core and suburban office locations is significant across various cities (100% in the case of Gurgaon; 300% in the case of Mumbai and 60% in Bangalore). In addition to this start-ups should look for flexible lease terms which allow organisations to customize office spaces within the contractual terms helping them scale up or scale down space depending on the growth.

Physical Space & Location: From a physical standpoint, start-ups prefer big, open spaces with interesting architectural features and flourishes that make the office feel unique. At the same time making effective use of the space available is equally important. The emerging workforce is increasingly becoming concerned about the kind of work space they work in and how best it is a reflection of them.

Workplace Design: Maintaining personal working space increases productivity. Any physical workplace design should be complimented by a mental and emotional environment where employees feel comfortable. Evidently though, there are a huge amount of benefits which arise from the design of a workplace, contributing to the overall increase in employee productivity. Factors such as ergonomic chairs, well-lit, functional desks, and up-to-date technology have been found to play an important role in workplace productivity. Additionally amenities such as yoga rooms, gyms, chill-zones for customer or employee engagement can have an impact on absenteeism, attrition and productivity.

Technology and connectivity: Every business today thrives on technology and its availability. Often it is not an option and the lack of the latest in technology, bad connectivity and adequate amenities will not bode well for the business. For B2C businesses specifically, end consumers are increasingly dependent on technology to connect with brands and hence adequate technology amenities become a necessity. In India specifically, technology can be an enabler and help businesses reduce costs. According to a CoreNet Global report on Smart Cities,India is especially well poised to utilize technology solutions with over 1 billion mobile subscribers and over 375 million mobile subscribers.

Disruption is often a word used in start-up circles, something that they often aspire to with the rise of ‘disruptive’ companies (that were once start-ups) such as Uber, Facebook, Google, only to name a few.Start-ups may choose to be disruptors either in terms of the service provided, business models, customer interaction and others. Many times, corporate real estate takes a back seat and is often not regarded in such discussions,despite its impact on business success and productivity. Every organization, including start-ups should aspire to be disruptors in their real estate choices and decisions, to get the maximum for their business, increase productivity and stand apart as wise decision makers in comparison to their counterparts.

Corporate Comm India(CCI Newswire)