Emerging Trends in Indias Office Sector

Emerging Trends
In India’s Office Sector

- Occupier Perspective
December 2018
Preface
The face of India’s office sector is changing at a pace never witnessed before.
Considering an enhanced focus towards employee well-being and retention, which
is propelling the setting up of new standards in the design and aesthetics of office
spaces, this change is inevitable. Corporates are moving from the concept of Green
Buildings to Well Certified Buildings, indicating adoption of a holistic approach
towards providing ease of work and delightful employee experiences.
In addition to the focus on workplace wellness, growth of the shared economy is
also changing workplace dynamics. Co-working spaces are mushrooming and
finding increased space in the traditional occupier mix of Indian office markets.
Not only are startups occupying such spaces, but even large corporates are keenly
seeking these alternative spaces.
This report, ‘Emerging Trends in India’s Office Sector - Occupier Perspective’ details
out some prominent PE investments which have been recorded in the co-working
sector and analyzes business models adapted by co-working players.
An interesting section in this report is the study on growing importance of fintech
and how it is impacting real estate in India. As per National Association of Software
and Services Companies (NASSCOM), the Indian fintech software market revenue
will touch $2.4 billion by 2020 from $1.2 billion currently. Push from the government
as well as innovation is dictating this growth.
The report also analyzes how the workplaces-propelled by technology will result
in enhancing the experience of working and paving the way for higher productivity
and efficiency. Technology will, in fact, act as the cornerstone around which many
key workplace decisions will be based.
I do hope the report provides some interesting insights to all those who are looking
closely at the key trends and future dynamics of workspaces in India.
Ramesh Nair
CEO & Country Head
JLL, India
1 Emerging Trends in India’s Office Sector - Occupier Perspective Emerging Trends in India’s Office Sector - Occupier Perspective 2
The key highlights of this report are as follows:
Glance
Overview of the Commercial markets shows a healthy pan India absorption (net absorption for the year 2018 is projected at 33.3
million sq. ft.), which is anticipated to grow steadily to surpass 39 million sq. ft. by 2020 with a strong supply pipeline and stable
vacancy levels.
At a
Robust Office Sector Absorption predicted during 2018-2020
50 25.0%
44.7
43.6
44.4
42.0
40.5
39.3
38.5
38.0
37.0
37.4
36.7
36.6
40 20.0%
34.9
29.4
29.9
33.5
33.3
Completions / Absorption
30.9
30.0
28.7
26.9
26.8
26.8
30 15.0%
(million sq ft)
21.6
- Executive Summary
Vacancy Rate
20 10.0%
10 5.0%
0 0.0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F 2019F 2020F
New Completions Net Absorption Vacancy Rate

Source: JLL REIS, 3Q18
Changing Occupier Trend is being witnessed, with an increasing demand from non-IT office occupiers across cities. BFSI,
consultancy business, telecom, healthcare, biotech, real estate construction, e-commerce and co-working service providers are
actively taking up spaces.
Pan India Office Occupier Distribution (%), 3Q18
100% 5%
17% 13% 12% 15% 11% 10%
90% 9% Co-Working Provider
22%
3% 4% 10% 9% Telecom, Healthcare-Biotech, Real
80% 2% 7% 9%
1% 11%
Estate Construction & other Industries
70% 29% 24% 15% 15% 17% 15% Miscellaneous

26% 10%
60% Manufacturing / Industrial
50% IT / ITES
33% 36% 38% 41% 36% 42% Consultancy Business
40% 36% 41%
30% E-Commerce
3% 3%
20% 4% 3% 7% BFSI
10% 9% 8%
8% 3% 7% 8% 4%
10% 4% 5%
11% 8% 15% 14% 13% 12% 11% 9%
0%
2011 2012 2013 2014 2015 2016 2017 till 3Q18
Source: JLL REIS 3Q18
The Fintech Revolution
Co-working Spaces show Increased Absorption A comparison of the cumulative co-working space take up by different service Fintech incubators and
India Stack1 through financial
providers across top 7 cities, during the first nine months (January-September) i.e till 3Q of 2017 and that of 2018 indicates a marked accelerators which have created
inclusion and the Aadhaar
increase. While in the first nine months of 2017 the space take up was 1.11 million sq ft, it increased more than three times to 3.44 an induced demand for newer
(world largest biometric
million sq ft during the first nine months of 2018’. office solutions, subletting, co-
identification system). working and co-living spaces.
Growth in Space take up by Co-Working Service Providers across top 7 Cities during
first nine months of 2017 and 2018
The Indian government has placed

fintech in the forefront for achieving new
milestones in the financial and digital
Till 3Q 2017 Till 3Q 2018 infrastructure of India. Fintech companies
1.11 3.44
are reaping benefits from:
mn sq. ft mn sq. ft
The Pradhan Mantri Jan-Dhan Yojana Efforts including “Make in India” and
(the Prime Minister’s People Money Scheme) “Digital India” that have resulted in an
launched in August 2014, which has resulted encouraging environment for the Indian
Source: JLL REIS in the opening of over 295 million bank fintech evolution, propelling collaboration
Note: Space take up indicates only that in Grade A Office buildings
accounts penetrating rural areas of India. among domestic and international firms.
Co-working is no longer perceived as a new age workplace practice, suitable only for
start-ups and SMEs WELL certified buildings can result in higher returns and Technology is driving Human
values, greater marketability, faster leasing and sales velocity. Experience in Corporate Workspaces
A JLL survey conducted among top service providers on demand drivers ‘indicate that at
present mainstream corporates are the biggest driver, followed by SMEs and start-ups. The cost for inclusion of wellness features is a small percentage
Creating a more
of the overall tangible benefits and monetary returns, such as:
resourceful, comfortable
and safe atmosphere
Enhanced Overall cost

productivity reduction Helping employees
gains through reduced focus on their core
attrition rates business
Approximately Small and Medium

40-45% Enterprises (SMEs) along
with individual professionals,
of the business
together contribute another
opportunity in co-working
sector lies with mainstream 35-40%
corporate firms/large of the demand for
enterprises co-working space, followed
by start-ups Enhancing the positive
(15-25%) Increased
saving on
Optimum
correlation between
an efficient workplace and the
cost profitability of a company
energy and
utilization
water cost
Elevating employee
experience and
1
India Stack refers to the ambitious project of creating a unified software platform to enhancing productivity
bring India’s population into the digital age.
Outlook
India Office Market Trends in Pan-India upcoming office supply, demand and vacancy across top 7 cities
Healthy Pan India Absorption- After a marginal decline in 2017, the office market is set to grow noticeably in the future years. The net
absorption for the year 2018 is projected at 33.3 million sq. ft., which is anticipated to grow steadily to surpass 39 million sq. ft. by 2020.
Strong economic fundamentals, growing urbanisation and improving transparency will be the key factors driving commercial markets
in India.
• Strong Supply Pipeline - The Pan-India office market is likely to see completions of between 38-45 million sq. ft. every year,
Chapter Highlights
starting from the year 2018 till 2020 indicating a strong supply pipeline.
• Net absorption for the year 2018 is projected at 33.3
• Stable Vacancy - Vacancy declined by 30 bps to 13.7% (3Q18) compared with 14.0% recorded in 2Q18 due to higher demand and
million sq. ft., which is anticipated to grow steadily to
lower completions recorded during the quarter at a Pan-India level. With steady absorption projection, the overall office sector
surpass 39.3 million sq. ft. by 2020.
vacancy is likely to gradually come down in the medium term (2018-2020).
• Pan-India office market is likely to see healthy Projection of Steady Office Sector Absorption during 2018-2020
50 25.0%
44.7
43.6
completions of between 38-45 million sq.ft. every
44.4
42.0
40.5
39.3
year, starting from the year 2018 till 2020.
38.5
38.0
37.0
37.4
36.7
36.6
40 20.0%
34.9
29.4
29.9
33.5
33.3
Completions / Absorption
30.9
30.0
28.7
26.9
26.8
26.8
• Increase in demand for non-IT office space across 30 15.0%
Vacancy Rate
(million sq ft)
21.6
cities is evident from the changing pattern in
occupier distribution being observed. 20 10.0%
10 5.0%
• Share of co-working sector in total office leasing
was recorded to be approximately 10% till 3Q18 as 0 0.0%
compared to 4% during the first three quarters of 2017. 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F 2019F 2020F
New Completions Net Absorption Vacancy Rate
Source: JLL REIS, 3Q18
• Mumbai, Bengaluru, Delhi-NCR and Chennai have
shown marked increase in their proportion of co- Occupier distribution trend across top 7 cities
working space to total office leasing during the period.
• Non IT Space Take up Increases: The increase Pan India Office Occupier Distribution (%), 3Q18
India’s current Grade A office stock stands at a massive 532 in demand from non-IT occupiers across cities
100%
million sq. ft. and this is likely to surpass 700 million sq. ft. by is evident from the changing pattern in occupier 5% 10%
17% 13% 12% 15% 11%
90% 22% 9%
year 2022. Pan-Indian office markets have shown considerable distribution being observed. Significant office 3% 4% 10% 9%
80% 2% 7% 9%
vibrancy over the past few years and total investments in the asset space is being taken up by non IT/ITeS occupiers 1% 11%
29% 24% 15%
class have indicated a positive growth curve since the year 2013. viz. BFSI, consultancy business, telecom, 70% 26% 15% 17% 15% 10%
This section takes a quick look at the current performance and healthcare, biotech, real estate construction, 60%
future trends of the Pan-India commercial Grade A office sector. e-commerce and co-working service providers. 50%
33% 36% 38% 41% 36% 42%
36% 40%
A city-wise glance of space take-up by non IT/ITeS 41%
occupiers reveals that while in Bengaluru, Delhi/NCR 30%
3% 3% 4% 3% 7%
and Chennai it is the manufacturing/industrial sector 20% 10% 9% 8% 4%
8% 3% 7% 8%
that has been leading in space take-up starting from 10% 4% 5%
11% 8% 15% 14% 13% 12% 11% 9%
2013 till 3Q18, in Mumbai and Pune, BFSI has been 0%
2011 2012 2013 2014 2015 2016 2017 till 3Q18
the most prominent one. For Hyderabad, while Telecom, Healthcare-Biotech, Real
Co-Working Provider Miscellaneous
BFSI was the most prominent sector in non IT/ITeS Estate Construction & other Industries
Manufacturing / Industrial IT / ITES Consultancy Business E-Commerce BFSI
space take-up in 2013-2016, gradually the emerging
Source: JLL REIS 3Q18
E-commerce sector and consultancy have started
gaining prominence in 2017 and during first three quarters of 2018. In Kolkata,
manufacturing/industrial sector absorbed highest proportion of non IT/ITeS office space in
2013-2016 which changed to consultancy gaining prominence in 2017, but reverted again to Share of co-working
manufacturing/industrial sector contributing the maximum during the first three quarters of 2018. sector in total office leasing
touched approximately
During first three quarters of 2017 and 2018, of the total non-IT/ITeS space absorbed by different
10% by 3Q18 compared to
sectors, substantial space has been taken up by the emerging co-working sector, since an increasing
4% during the first three
number of office occupiers/tenants are considering shared space as a preferred option for office quarters of 2017
operations. This has been evident from the fact that Pan India share of co-working space in total office
leasing has more than doubled by end 3Q18 as compared to that during first three quarters of 2017.
Spatial distribution of co-working sector: Co-Working Sector Proportion (%) in Total Office Leasing across In Chennai and Hyderabad, where co-working sector is in its nascent stage, it
Top 6 Cities during January-September 2017 and 2018 indicated a relatively low proportion to total office leasing. Hence, no major
During the last one and a half years, the contribution of
Jan-Sep 2017 Cities Jan-Sep 2018 variation in the proportion of co-working space to total office leasing between first
co-working space to the total office occupier distribution
nine months (January-September) of 2017 and 2018 was recorded.
3.0% 12.0%
/ office leasing has grown significantly, as shown in the
Bengaluru The co-working concept is not new, but what fascinates is the exponential growth
Pan-India office occupier distribution graph above.
it has witnessed over the past few years. The concentration of co-working spaces
An analysis has been done of the changing proportion
of co-working space to total office leasing in each of the 7.0% Mumbai 21.0% is likely to intensify further in cities such as Bengaluru, Mumbai and Gurgaon, due
to the available infrastructure and presence of numerous start-ups. Hyderabad,
top 6 cities of India for the period between first three Co-working is the
3.0% 10.0%
backed by pro-active state policies and home to IT and e-commerce giants, is
Delhi NCR
quarters of 2017 and that of 2018. This is when co-working likely to witness fast-paced growth in the sector, since both these factors would private sector’s response
gained prominence in the office sector absorption. This help create further opportunities for start-ups and SMEs. The Tier II & III cities are to today’s human-
assessment shows that out of the key 6 cities, Mumbai,
Bengaluru and Delhi-NCR have indicated marked
2.0% Chennai 5.0% yet to witness much demand due to dearth of talent pool in these markets at
present. However, some cities like Jaipur, Chandigarh, Pune, Ahmedabad and
experience based
workspace requirements.
increase in their proportion of co-working space to their
total office leasing. However, during first nine months 5.0% Hyderabad 6.0% Kochi which have a presence of technology companies, are expected to witness
the emergence of co-working hubs in the near future. Technology companies are
(January-September) of 2017, it was Pune which recorded seen to be exploring these markets for expansion and growth.
the highest proportion (10%) of co-working space to total
office leasing, while during first nine months of 2018 it was
10.0% Pune 1.0% The following chapter takes a deep-dive into the key trends which are dominating
% of co-working sector in total office leasing
Mumbai recording the highest proportion (21%) . Source: JLL REIS commercial markets.
Note: In Kolkata, space take up by co-working sector during the said period has been
very negligible, hence its proportion to total office leasing was considerably low.
Tracing Trends in Evolving Workspaces
Chapter Highlights
• Increase in space take up by co-working service providers
from 1.11 million sq ft in first nine months (January-
September) of 2017 to 3.44 million sq ft during the same
period in 2018 indicates rapid growth of the sector.
• No longer is co-working space considered suitable

only for start-ups and SMEs. Large mainstream
corporates are now one of the main demand drivers.
• Co-working service providers are showing interest

in unconventional office spaces like malls, hotels,
airports, libraries and metro stations among others.
• More and more corporate occupiers are planning

to incorporate technology across the lifecycle of a
workplace right from planning stage till operations.
• Growth in fintech tech startups is increasing the

demand for low-cost and alternative office spaces.
• E-commerce players are considering co-working

spaces for some of their operations due to
flexibility and cost savings offered by them.
• With employee wellness gaining increased

importance, ‘Well Certified Buildings’ are making
their mark on Office markets in India.
In this section, the report looks at some of the key emerging

trends in office markets viz. the Co-working revolution,
Technology and its impact on workspaces, Fintech and its
impact on commercial markets, E-commerce sector trends
and growing importance of Well Certification concept in
Indian office sector.
Co-working Revolution Developers
• Enhanced possibility of attracting new tenants based on higher visibility and better
Evolution and Impact of Co-working Sector: Co-working or shared workspaces have emerged as a new occupier category taking marketing of the property
up large spaces. With the start-up ecosphere still growing in India, global players have also started showing their interest in the co- • Helps in carving out incubation space for tenants
working segment. The co-working service providers offer: • Ease in leasing out small sized office spaces
• Enhancement of property values
Allow businesses Provide ease • Enables efficient utilisation of unused spaces which may experience less of demand
to free up capital of movement • Ensures better up keep and maintenance of their asset
Occupier
New commercial Enable minimal A platform for the growth of • Enhances employee productivity, efficiency and
enables talent retention through vibrancy in
tenancy models fixed investment small and medium enterprises (SMEs).
work culture and enrichment of life experiences
• Increased flexibility in adopting lease tenure Today, there are approximately
Factors like saving on upfront operational costs and the flexibility of scaling up or terms and deciding upon scale of operations
“Shift in work 350 co-working players/service
downsizing the office space (based on the performance of the business) are making • Continued support in Human Resource/Capital Benefits of
force dynamics has encouraged Co-working Culture providers operating an estimated
co-working spaces a big attraction for those wanting to start a new venture with enhancement activities from service providers
enterprises to rethink their workplace Enables less involvement in workplace 500 shared workspaces across the
limited resources, namely start-ups. Though cost and flexibility were the initial drivers, strategy in terms of delivering a solution management country, compared with less than
these co-working spaces now also help build communities by allowing like-minded with a high degree of agility and • Reduction of fixed overheads 30 centres in 2010. Approximately
individuals to connect with each other. Further, the culture and work environment at flexibility. Enterprises now are looking for • Enables expansion of business network and
these co-working offices (with unique amenities such as gym, spa, food court, gaming
80-90% of the present day
Smart Workplace Solution Providers to offers a ‘brand push’ for start-ups and SMEs
zones, sleeping pods, crèche services etc.) sets them apart from traditional business through higher visibility of their brands operators started their operations
deliver Design-Build-Operate solutions,
centres and shared spaces like hot desks etc. These facets have helped popularize co- • Provides access to varied in-house facilities during the last 12-18 months.
for their entire workplace portfolio, which
working spaces among employees and entrepreneurs alike. Apart from the ease and maybe spreading across countries” under one roof and acts as a common link
alacrity that co-working/flexi spaces offer while setting up a new office, with a plug- between hospitality, administration and
Sidharth Menda other support services, which turns out to be
and-play model, following are the benefits associated with the co-working ecosystem: CEO, CoWrks beneficial mainly for small scale and newer
companies
Business District
• Ensures increased options for socialising thereby resulting in expansion of
clientele and consumer base for F&B, recreation and retail asset classes.
• Supports offline connection between companies of varying or similar
scales of operation
Growth in Cumulative Space (million sq. ft.) Take-up by Co-Working Service
Providers across top 7 Cities, during first nine months of 2017 and 2018 A survey conducted by JLL, among a few prominent co-working service providers namely WeWork, CoWrks, Awfis, IndiQube and
IKEVA reveals the following:
Most of the co-working spaces in cities like Bengaluru,

Key Findings on Co-Working Sector Mumbai & Delhi-NCR are spread across the central, suburban
Till 3Q 2017 Till 3Q 2018
1.11 3.44
and peripheral locations.
It is in general essential for a

co-working space to be located in
well-connected areas in order to be
mn sq. ft mn sq. ft competitive since startups prefer Initially, large enterprises who now contribute a major
to be located close to their vendors proportion of the co-working space take-up targeted the
and clients. CBDs and prominent suburban districts for their operations.
Source: JLL REIS
But of late, these enterprises are spreading their footprint
As indicated in this graphics, the cumulative space take up by co-working sector in top 7 cities, during the first nine months (January- across city areas, to reduce the commuting time of their
employees. This helps achieve higher productivity and
September) of 2018 recorded more than three times increase compared with the same period in 2017. Approximately 3.44 million sq
In order to reduce dependency on efficiency. This trend is more visible in metro cities like Delhi-
ft space was taken up during the first nine months of 2018, compared with 1.1 million sq ft recorded during the same period of 2017.
CBDs, some service providers like NCR, Mumbai and Bengaluru where daily commute to office
This indicates an exponential future growth of this emerging sector in the country.
Awfis Space Solutions have started places consumes a lot of time.
experimenting with innovative
Future Expansion Plans of Prominent Operators
concepts like mobile workspaces
• Awfis Space Solutions plans to expand to Chennai by December, • By year 2020, Awfis aims at where they convert tempo travelers
while it will also explore smaller Tier-II cities like Jaipur, 1 lakh seats and has further into small offices. The decentralization of co-working hubs may also be due to the
Ahmedabad, Bhubaneshwar, Kochi and Indore. It envisions plans to take this up to 2 lakh fact that strategically located hubs are likely to capture higher
expanding its business from current 55 centres across 25,000 seats seats with about 400 plus demand from traditional technology and financial companies.
to 100 centres comprising about 50,000 seats by June-July 2019. Further as mentioned by IndiQube, IT These firms are looking for extra spaces closer to their existing
centres a year thereafter.
companies, in specific, have shown offices in different parts of a city including non CBD areas.
a preference for SBDs over CBDs due
• Smart works plans to venture into Hyderabad office to availability of quality tech talent
sector. With 124,000 sq. ft. of space in Chennai, it has plans in SBDs. Tech employees belonging
of adding new spaces in cities where it is already present. to the millennial generation prefer
With increasing number of millennials (who play a major role
It is also likely to explore Tier-II cities like Bhubaneshwar, SBD areas of a city, since they adopt a
in driving the growth of co-working sector) starting families and
Chandigarh, Coimbatore and Ahmedabad. migrant job profile and SBD and PBD
areas provide affordable homes in the buying homes mostly in the suburbs/peripheral locations due
early stages of their career. to affordability, co-working spaces are seen to be coming up in
suburban areas as well.
• Hive Collaborative Workspaces has taken up
approximately 50,000 sq. ft. of space in VR Mall, Chennai
in 1H2018 and has plans to add another 20,000 sq. ft.
space to its existing center (150,000 sq. ft.). at VR Mall,
Bengaluru. It also has plans to set up three new facilities
“Large enterprises are
in Gurgaon, Mumbai and Pune by end 2018.
increasingly looking to build their
offices in collaborative spaces to help
• Since its inception in India in July 2017, WeWork has
expanded to a total of 12 centres across three key cities
them drive their community, spur
- Mumbai, Delhi and Bengaluru with over 15,000 desks interactions as well as retain and attract
across 1.5 million sq. ft. leased office space and further talent - and as one of the fastest growing
aims to expand to over 20 centres across key markets by economies in the world, this demand is
end 2018. In September 2018, WeWork India has taken
only set to increase in India”
up an entire commercial building Zenia, spread over 12
floors, on lease in Hiranandani Estate, Thane. Karan Virwani
CWeO, WeWorks India
• It has plans to expand to emerging cities

like Pune, Hyderabad and Chennai by next
year, to further strengthen its footprint in the
country’s co-working sector.
Source: Compiled from Secondary Sources
Demand Drivers and Sectoral Distribution of Occupiers in Co-working: From the JLL survey that was conducted among few prominent service providers, it has been assessed that the demand for co-
working space that gets generated among mainstream corporates, SMEs & start-ups; can further be classified depending on the
Co-working is no longer perceived as a new age workplace practice, suitable only for start-ups and SMEs who need the flexibility of
type of occupiers taking space. They could belong to different sectors of the economy viz. IT/ITeS, consultancy, E-commerce, BFSI,
tenure as well as rentals, that a standard leased office space could not offer. In recent times, the advantages of the co-working sector
manufacturing/industrial and other service- professionals including stock brokers, event managers, lawyers & doctors, chefs, musicians,
have also attracted the attention of the more established and mainstream corporates and large enterprises from different industries.
fashion and media/radio personnel. WeWork provides a broad estimate of the percentage space take-up by sectoral occupiers in co-
Hence, mainstream corporates too act as one of the prominent demand drivers for flexible co-working space.
working sector as follows:
The key benefits associated with co-working spaces in India are predominantly-cost, infrastructure and networking opportunities. • IT/ITeS and E-Commerce form 70-75% of the demand.
However, the benefits associated vary according to the needs of the occupier sets and their scale of operation. While freelancers are • BFSI and investment banking sector contributes approximately 10% of the demand.
primarily focused on the cost factor, start-ups and SMEs focus both on cost and infrastructure. For large corporates, on the • Manufacturing sector occupies less than 5% of co-working space and
other hand, travel or regular commute convenience is a high priority, and hence prime office location is as important as infrastructure. • Consultancy contributes to 2-3% of the demand for co-working space, since privacy
In India’s top cities, Delhi National Capital Region (NCR), Mumbai, Bengaluru and Pune, a co-working space is likely to lead to cost is a concern in shared workspace.
savings in the range of 20-25% when compared with leasing a traditional office space. Some of the future demand
• Other services contribute the rest (approximately 10-14%) of the space take-up.
drivers maybe the Financial sector,
As mentioned earlier, it has been observed that currently mainstream corporates contribute to a substantial chunk of co-working • In cities like Bengaluru, Mumbai, Gurgaon, Hyderabad etc., corporates such as
Human Resource-consulting Accenture, Amazon, GE, Boeing, Alibaba, IKEA, HSBC, PayPal, Verizon and Microsoft
space demand across cities. The survey conducted among few prominent co-working service providers reveals that, at present,
approximately 40-45% of the business opportunity in co-working sector lies with mainstream corporate firms / large
firms, Recruitment companies, etc. are occupying a major share of co-working space.
enterprises seeking alternative, activity-based workplaces to nurture their talent and enhance their business growth. The small and Legal firms, Healthcare-health The survey also indicates that according to some of the service providers, sectoral
medium sized enterprises (SMEs) along with individual professionals, together contribute to another 35-40% of the demand tech, Manufacturing/Consulting, distribution of occupiers gets assessed for estimating the demand that is getting
for co-working space, followed by start-ups (15-25%) who form the third demand group. Long-term solutions are not completely Support Services sector-web generated from among IT/ITeS, BFSI, Consultancy, Manufacturing and E-commerce
plug & play. It is more customized to the needs of the large enterprise on a Design-Build-Operate model. developers and Digital marketing sectors for their co-working space. While for other service providers, the sectoral
firms, among others. occupier base is a function of the city and the particular location they are operating
The change in co-working space take-up since inception, as seen in CoWrks: out of. This is because the occupier distribution differs between cities and may also
differ between two micro-markets of a single city
Private Equity Investments: As the co-working concept is gaining momentum
Started in 2016 with Freelancers contributing less Currently Freelancers contribute 5%, Start-ups
in India, institutional private equity investors as well as individual investors are JLL
than 10%, Startups and SMEs- 40% and Large and SMEs- 25% and Large Enterprises- 70%
exploring investment and partnership opportunities within this sector. View Companies need to
Enterprises-50%. However, large Enterprises (with 20% Swing Space, 50% Long Term
were looking only for Swing Space (incubation). solutions). • For investors, the opportunity is multifold- embrace the new reality of
- The investment ensures a great financial return. employees’ expectations and
- It also provides access to a larger startup ecosystem, where these technology enabled ways of
investors can find new and enterprising investment opportunities. working and adapt their workplace
For the corporate workforce, while cost and location continue to be the dominant parameters, strategies accordingly. An innovative
providing a different work experience to its employees is also acting as one of the determinant
For most corporate • In the last one year, several investors have therefore focused on investing in
this space, to achieve scale and growth purely via the co-working model. design, focused on flexibility and
factors for operating out of co-working space. The workforce, much of it comprising millennials,
occupiers, co-
interaction in a well-connected
benefits from the vibrant design and work ambience that such flexi-spaces offer. MNCs too, are
working has become • Rising investment in the sector is leading to further propagation of location can boost employee
moving out of their traditional office set-ups, proving the popularity of these new age spaces. Some
a business solution, the co-working concept, as the shared space providers are utilizing engagement and
large firms like Amazon have kept a few floors vacant in their upcoming office spaces, to experiment
not just a real estate the funds for geographical expansion, technological innovations and attract talent.
with the co-working concept.
alternative brand building in order to tap mainstream corporates, as well.
Some of the prominent PE investments recorded in the co-working sector over the last one year are, as follows:
Private Equity Investments in Co-working Sector
Co-working Operators Fund/Investor/JV Partner Year
Examples of Corporates operating out of co-work spaces
91Springboard FreakOut 2018
• DXC Technologies (formerly HP Enterprise Business) moved into IndiQube WestBridge Capital Partners 2018
WeWork’s brand new Goregaon facility in Mumbai.
Creator’s Gurukul A group of individual investors 2018
• A part of the Tata company Jaguar Land Rover’s team works from
WeWork in Mumbai’s Bandra Kurla Complex (BKC). The company Corporatedge SIDBI India Opportunities Fund 2018
also took up 180 seats at Smartworks in Pune. Awfis Space Solutions Sequoia India, Innoven Capital and The Three Sisters: Institutional Office 2018
• One of Google’s many teams works out of Awfis in Gurgaon. WeWork India Embassy Group - JV Partner 2017
• Amazon India has a team of 16 at Smartworks in Pune. BHIVE Blume Ventures 2017
• IndiaMART (which has its own office in Noida) while trying to build Innov8 LetsVenture & Venture Catalysts 2017
a new product with a team of 25 needed a strategic environment
The Office Pass A group of individual investors 2017
and moved into 91 Springboard’s facility.
91Springboard Sandway Investment Ltd, Pearl Brook Holdings, AMA Holdings, Silo Holdings and Al Nour. 2017
InstaOffice Globevestor and other angel investors 2017
Acquisitions and Joint ventures are other business models being adopted by co-working service providers /operators in order to A JLL Retail survey conducted in 2Q 2018, across top 12 mall developers in India, indicated that almost all of them are planning to
venture into new markets and scale up. ‘AltF CoWorking’ acquired ‘Daftar India’ to expand in Delhi NCR; international shared workspace incorporate shared or collaborative spaces in the future, since co-working spaces provide mall developers an opportunity to tap
company ‘WeWork’ forayed into India in partnership with Indian real estate developer Embassy Group, leveraging the combination of additional footfalls of the clients/employees who work in such spaces.
best in class technology and real estate expertise and prominent developer RMZ Corp launched its own co-working arm ‘CoWrks’.
For the service providers, non-conventional office spaces offer location benefits and connectivity. Some the other benefits are:
Evolving Coworking Ecosystem in India Successful Getting retailers, Bringing in new life
Ease of
integration of workers/employees and and experiences in
WeWork has a JV with ‘AltF CoWorking’ parking
work and play consumers together retail locations
Embassy Group in India acquired ‘Daftar India’
However, this trend of operating out of malls rather than conventional offices, may also act as a disruptor, since, it might affect the
work discipline that is observed in the confines of a traditional office space/ building.
Benefits of Co-working spaces to different stakeholders in alternative asset classes
Investment by JV between
Indian real estate Collaborative Acquisitions Indian Real
Institutional and work space
company and by Co-working Estate companies
individual Investors platform backed
international co- players Formulating own
in Co-working by PE Firms
working player Co-working arm
Spaces
Mall Clients/
Co-working
Developers/ Employees in
space
Hotel Co-working
operators
Operators spaces
Rising investments in co- The Hive, a collaborative work-space CoWrks is a unit of Real
working spaces since 2017 platform backed by the Xander Group Estate developer RMZ Corp
INVESTMENTS AND ACQUISTIONS BENEFITTING THE COWORKING PLAYERS

• Additional Revenue • Readymade • Availability of F&B and
stream infrastructure and recreational facilities
Geographical Technological Strengthening Facility Rising client base amenities
• Draws additional • Easy accessibility to
Expansion Augmentation Management including corporates footfalls from co- • Low Rentals Parking spaces
working spaces
Evolution of Traditional Workspaces: In recent times, mainstream corporates are also JLL
taking initiatives to evolve and modify their traditional workspaces qualitatively, to offer View
benefits to employees at par with those offered by co-working space operators. Ease of We expect further
Typically, a co-working space provider leases an office space, rents it out and charges according to
work is likely to result in enhanced productivity and efficiency. In addition, the positive JLL’s Mumbai office at One BKC growth in these
the number of desks and hours used. This is the pure lease model. A minimum guarantee along-with
attributes that co-working space offers viz. open culture, ease of networking and is a recent example of such an hybrid spaces where
collaboration, aggressive growth through multiple channels, vibrant ambience, etc. have also revenue share model is also being followed by some providers.
initiative by a corporate. the synergy between
influenced mainstream corporates to transform their traditional work spaces on similar lines. As mentioned by IndiQube, they operate on a pure lease model wherein they take up an entire
Intuitive meeting rooms, co-working and
Recent examples of some of the IT/ITeS and E-commerce giants in metros may also be cited, building from the landlord through three different space options like: other asset classes is
technology to safeguard
where the upcoming workspaces/campuses are being designed keeping in mind space • Built to Suit (BTS) maximized.
enhanced air quality, innovative
allotment for technological experiments. Here too, amenities are being offered to employees collaboration and interaction • Old buildings in which they invest in its complete refurbishment, as per their required specifications
to ensure greater flexibility and productivity. Corporates are also seen entering into areas are all designed keeping • Under-construction buildings where they work with the landlord starting from conceptualization of the same
management agreements with co-working operators, in order to provide better workplace employee well - being in mind.
experience to employees. Newer revenue models are also being explored. For example, community-based offerings, canteen services, office rewards
program and convenience services (having tie-up with other companies and getting facilities at a discount) are being considered.
Unique Spaces: Co-working operators are not limiting themselves to office complexes but
expanding their horizons beyond and venturing into shopping malls, hotels and metro stations, as well. The co-working and retail/
hospitality mix is benefitting all stakeholders since it is successfully integrating work and play. Co-working space occupiers get access
to F&B and retail opportunities, which acts as a ‘perk’ for these
shared space users. Examples of Co-working Operators in Non-Conventional Spaces
This move toward shared office space and resources is part Co-working Examples of new ventures by Alternative
Operators co-working operators Asset Class
of the larger sharing economy trend. Millennials, who value
access to many goods and services over ownership, are Awfis Ambience Mall, Gurgaon Mall
the main catalysts behind the growing demand for shared Awfis Raghuleela, Mumbai Mall
products and services. Further, co-working spaces that Awfis Nucleus mall, Pune Mall
act as retail incubators, provide higher exposure to smaller, Awfis Taj Deccan Hotel, Hyderabad Hotel
nascent brands, while enjoying the flexibility of compact and The Hive VR Bangalore, VR Chennai Mall
modular space and short-term leases. Some recent examples of Indiqube Marriot, The Courtyard, Bengaluru Hotel
prominent co-working operators taking up space in assets other The Circle HUDA Metro Station, Gurgaon Metro Station
than conventional office spaces are mentioned alongside: Source: Compiled from Secondary Sources
Challenges and Way Forward:
Technological Innovations Impacting Change in Workspaces
The prospect of co-working space in the future looks bright with demand
drivers fueling the need for high quality workspace with amenities. However,
Requirements of today’s workplace
a certain amount of consolidation is expected as the co-working sector Workplace propelled by Technology:
matures. Some of the limitations being witnessed currently are: Structural changes are currently underway in the
manner in which corporates are working. Greater Collaboration Agility
Non-optimum Utilization: Exclusive agreements allow only
focus is now seen on creativity, agility, innovation
one co-working operator to be accommodated in a building Integration
and leads to non-optimal utilization of space. This is also likely and collaboration. The changing nature of
of Human
to limit the growth potential and restrict the co-working space working practices have a profound effect on the Experience, Space
providers from offering a wide range of quality services. working environment and the requirements from Management and
Innovation Productivity
an office space. End users in a corporate space now Technology
expect a seamless integrated and personalized
Orthodox attitude of Stakeholders: Land and property
experience tailored to their needs. Consequently, Happy Experience
owners who have not have been able to understand
and accept the co-working model, may remain cautious technological innovations and tools are being Digitization for Employees and
about leasing their assets to co-working operators and implemented by corporates that would play Visitors
lose out on significant revenue opportunities. an important role in redefining the future of
workspaces in India.
Data security and privacy issues: The Fortune Technologies such as Internet of things (IoT) and Artificial Intelligence (AI) are
500 companies or giant corporates may face now being adopted in India by corporate occupiers. Technologically enabled
challenges on account of preserving data security
“All our transport vehicle
workplaces offer the following benefits:
and privacy in a shared space. booking is done through an
• They create a more resourceful, comfortable and safe atmosphere
app based solution giving real
• Help employees focus on their core business, rather than spending time on
time locations to users helping
administrative and functional aspects of operations.
Disruption of Discipline: Recent trend of operating them plan the day better”
• Improved employee experience enhances productivity and thereby has a
in non-conventional spaces like malls, hotels etc. Sumeet Anand
Global Infrastructure & Logistics positive impact on the top-line, as well.
rather than traditional office spaces, may act as a
disruptor to discipline of work. Leader, Genpact So by incorporating technology in workplaces, corporates are able to save on a
major proportion of the cost component i.e. human capital.
However, the pickup in activity in the co-working sector in India is
expected to continue, with service providers offering newer and better
• IBM has partnered with IIT Bombay to advance artificial intelligence (AI) research in India. They together intend to accelerate the
equipped co-work spaces and occupiers continuing to have notable
application of AI, machine learning (ML), natural language processing and related technologies to business and industry.
interest in flexible office space. The ability to maintain strong relationships
• CoWrks has incorporated technology features in their shared spaces such as Connect App, Virtual receptionist, sophisticated visitor
with existing tenants and attract new tenants will be increasingly management etc.
important for developers/ landlords and service providers. • Companies with large spaces have started incorporating navigation technology that helps to locate employees through mapping apps
The co-working segment in India is likely to receive investments worth
$400 million by 2018 (Source: JLL Market Research). Data Enabled Decision Making: Integrated Corporate Business Strategy
In this section the growth of the co-working sector was studied. The
CFO CRE CIO HR
following section analyzes how technology is impacting the future of
traditional workplaces in the country.
“Over the next few years, Workplace +Technology

the co-working sector would see
Landlords may gradually adopt more innovative
measures ensuring maximum use of their a transition to franchisee models, Today CFO and HR professionals of organizations collaborate with CRE and CIO Heads on how to improve
property to support co-working culture. This will management contracts and managing employee productivity and satisfaction at the business planning stage itself in terms of:
ensure comfortable and supportive entry and of skills, in that the operators will bring in • Real estate space optimization • Creating an optimal • Maximizing Employee satisfaction:
exit pathways for the service providers. Adopting the expertise while physical real estate workspace environment
- Making employees agile and - Safety
a partnership model other than the currently collaborative (Sensors measure
prevailing tenancy structure, is also likely to would lie with the landlords” CO2, light, humidity,
- Environment
- Current desk utilization - Health & Wellness
support the future growth of the sector Monika Mishra temperature and noise)
Founder & General Manager, - Meeting rooms utilization - Amenities
IKEVA
As the efficiency of employees and therefore business profitability is dependent on the environment of the workplace, it is becoming
increasingly important to analyze various parameters. Technological tools help track data on various aspects related to the
functioning of a workplace and employee satisfaction. In fact, HR, IT, Finance and business operations
JLL
are linked to the results of the data driven by real estate technologies. Conventional measures of View
achievements such as higher income and cost savings are being augmented with real time data analysis Technology
would be one of
of softer aspects of human experience such as sustainability, health and well-being of employees.
the most pertinent
Gradually more and more corporate occupiers are planning to incorporate technology across the catalysts in defining
lifecycle of a workplace right from planning stage till operations. It is generally seen, that this enhances the the evolution of a
efficiency of a real estate space by 20% in terms of space utilization. The table below lists the various modern workplace
technological tools and analysis towards which corporate occupiers are showing interest.
Components Tools Outcome/Benefits

Fintech and its Impact on Real Estate
Fintech is an advancement of financial and allied sectors driven by technology and changing customer expectations. Typically, it is an
umbrella term for any kind of technological innovation used to support or provide financial services. It enables financial firms to gain
• Streamlines booking process; tracks no
a competitive edge by streamlining processes towards gaining efficiencies and effectiveness. While all financial firms are increasingly
Meeting Room Interactive screen for booking, show to increase occupancy rate
Technological augmentations Technology driving Human Experience
reliant on technology, fintech firms put technology-driven innovation at the core of their activities.
Management check-in and check-out • Enhances employee experience and saves
real estate cost The sector is attracting support from public and private investors
in Corporate Workspaces
Desk An App that enables booking of desks,

• Enables better understanding of desk usage enabling the birth of newer fintech start-ups, incubators, accelerators and JLL
Bookings manages bookings and locates colleagues
and facilitates desk sharing schemes for innovation labs. Prominent examples of fintech innovation are mobile View The Indian government
has placed fintech in the forefront
mobile centric workforce payments and banking, cryptocurrency, peer-to-peer financing, financial for the progression of financial and digital
• Saves time as reduces rush/queue learning, Regtech and Insurtech. In future, fintech is expected to be driven infrastructure in India. Fintech companies are
Pantry An App to place food orders at reaping benefits from:
• Enhances well-being as enables employees by technology upgradations like artificial intelligence / machine learning,
Solutions workplace and pay digitally
to track calories and generate health tips blockchain, predictive behavioral analytics and data-driven marketing. - India Stack2 through financial inclusion & the Aadhaar
(world’s largest biometric identification system).
• An App for reserving parking space in advance Fintech, in India, is in the spotlight as major financial services
Parking Saves time and ensures convenience and - The Pradhan Mantri Jan-Dhan Yojana (the Prime
Management • Parking Guidance System to reduce search comfort for the employees and visitors stakeholders including traditional banks, alternative lending firms and Minister’s People Money Scheme) launched in August
time & improve overall traffic flow 2014 has resulted in the opening of over 295 million
NBFCs, payment banks and service providers, investors, regulators, bank accounts penetrating rural areas of India.
insurance providers, wealth management and broking companies are - Efforts including “Make in India” and “Digital
for Space Management
Using IoT and heat maps, real using fintech. Sensing economic benefits, the government of India has India” have resulted in an encouraging
Tracking Space Helps in planning for optimal space
time occupancy of desks and environment for the Indian fintech evolution,
Utilisation utilisation, maximising space efficiency undertaken a series of efforts to support the fintech boom, some of which
meeting rooms can be tracked while encouraging collaborations among
are detailed below. domestic and international
firms.
Government aids Fintech Growth: Despite having a strong technology and
Monitoring Using IoT to observe air quality Enhances wellbeing and comfort entrepreneurial ecosystem, India has remained the largest unbanked or under-banked
air quality and air pressure level of employees country. Since the implementation of demonetisation in India in November 2016, 2
India Stack refers to the ambitious project of creating a unified
e-payments and fintech have become indispensable. software platform to bring India’s population into the digital age.
The future of workplace would be all about human

experience and therefore the satisfaction and productivity Example of Technology enabled Workplace - Future of Work: Intuitive Sharp focus on
of employees who are actually consuming space, are the JLL’s Mumbai office at One BKC An unwavering focus meeting rooms with employee comforts
new indicators of success for both occupiers and investors. on employee well- lighting sensors, tech- like a swing in
JLL’s Mumbai office embraces the best work-tech to simplify being through an the working area,
Along with occupiers, landlords and developers will play enabled reservations,
modern working while keeping the environment ‘human’ enough in-house walking track, 15-min stop clock enabled foosball table in
a key role in the transformation of workplaces, which is a gym, a basketball
for the staff to feel at-home. Spanning across 22,000 sq. ft., it is a briefing room and the cafe, etc.
taking place everywhere and India is also very much part of loop, with enhanced air
100% environmentally sustainable workspace, incorporating the wireless AV systems for
this new revolution. quality technology. simplified multi-location
latest technology for enhancing human experience.
Innovative collaboration
In this section the technological innovations impacting
Key features: collaboration areas to
the future of workplaces was studied and examples
boost employee productivity
of how human experience in corporate work spaces is
Nature-aligned - an all-white board-room to
being driven by technology, have been cited. Another encourage cerebral discussions,
with life-sized trees
key trend being witnessed in commercial real estate and chirping birds amphitheater styled area for
is the growth of the Fintech sector. The following to de-stress the informal engagements and
section analyzes key trends in this sector and how it is workplace at frequent smaller breakout zones and
impacting commercial real estate. intervals. dedicated phone-booths for
private discussions.
Partnerships in Fintech Sector in India in 1H 2018 Select fintech investments concluded in early 2018 are given below:
Sector Start-up Partnered with Purpose Sector Company Investor(s)

Amazon Web Artificial Intelligence Peritus.ai Ideaspring Capital and The Hive
Haptik Automate customer support, client cultivation and sales analytics
Artificial Services
Digital retail payments Pine Labs Actis Capital, Altimeter Capital and others
intelligence Kotak Mahindra Launch an AI-powered voice bot with Kotak Mahindra Bank’s phone banking
Nuance Digital Wallet PhonePe Flipkart
Bank helpline.
Drone Aarav Unmanned Systems GrowX Ventures, 500 start-ups, and BellWether Advisors
Blockchain Ripple IndusInd Bank Facilitate cross-border payments in the country.
Financial Advisory NiYO Solutions Social Capital, JS Capital LLC, Horizons Ventures and Prime Venture Partners
Digit Provide travel insurance to travelers for flight delays, loss of check-in baggage
InsurTech Cleartrip
Insurance and paperless claims etc. HR tech Kaleidofin Omidyar Network, Blume Ventures and others
Aditya Birla Finance Leverage MoneyTap’s technology and data platform to evaluate and issue Insure-tech PolicyBazaar Japan’s SoftBank group
Lending MoneyTap
Limited Sector credit to customers
Lending LendingKart Fullerton Financial Holdings Pvt Ltd
Machine Instantly verify details of salaried individuals targeted to reduce turnaround
CreditVidya RBL Bank Lending Capital Float Sector Amazon Inc.
learning time for credit assessments.
Allow over 45 million FreeCharge users to utilize their wallet balance on any Lending Marketplace Paisabazaar EtechAces Marketing and Consulting
Flipkart FreeCharge
of PhonePe’s merchant partners Mobile Payments MoneyOnMobile S7 group
Amazon Payments Razorpay Tiger Global, Y Combinator, Matrix Partners
HDFC Bank Offer EMI on debit card transactions
Pay*
Source: PwC’s FinTech Insights January-April 2018
Paytm IndusInd Bank Offer fixed deposit services to its customers
Provides EMIs to finance online purchases for consumers not owning debit or Impact on Commercial Real Estate
PayU Kreditech
credit cards in India.
Select emerging trends witnessed in the office markets with the onset of fintech
PhonePe MMTC-PAMP Allow customers to purchase graded gold companies are elaborated below:
Payments Mumbai
Push its QR code-based digital payment system for 5,000+ dabbawalas in • Financial institutions which have been in existence for long, are now integrating with
Paytm Dabbawala
Mumbai. fintech companies for efficiency gains. These institutions are accommodating their
Association
fintech operations (innovation centres, incubators, accelerator programmes and
Paytm ofo Offer their users ofo’s bike sharing platform tech staff) in-house and hence are looking for additional office space.
PhonePe redBus Offer their users travel bookings and a platform to buy or sell 24-carat gold • A section of corporates prefers that the fintech service providers be in proximity and
Tamil Nadu State not in-house. Innovation centres are most likely to be housed in close proximity to
MobiKwik Enabling payments of utility bills using Mobikwik wallet
Electricity Board the parent company or in the same building,
while incubators which are non-client facing
Provide a seamless experience to customers with self-driven cars and also
Paytm Zoomcar functions, are likely to be located at an
reach a mass audience via the Paytm platform. “Since sales are
affordable or peripheral location.
*Note: While Amazon has a fintech arm, we have included some coverage of the retailer, in the following E-Commerce section. Source: PwC’s FinTech Insights January-April 2018
distributed across the
• Growth in fintech tech startups is increasing the demand for low-cost and alternative office
Key Fintech Investments: country, fintech companies
spaces. These tech companies consider co-working spaces and some lower grade buildings
Investments in Fintech (US$ million) would prefer a no-frill multi-
In 1H 2018, India observed closure of four major in the core and fringe CBDs, during the initial stages of their business.
city basic office infrastructure.”
Investments (US$ million)
deals from the top ten deals concluded in Asia, 2,500.00

• Increase in integration of fintech firms is encouraging corporates and occupiers to take
placing it as a dominant market for fintech 2,000.00 Mr. Ritesh Agarwal
up office spaces in energy efficient buildings, with modern technology infrastructure. Co-founder, Fonepaisa.
investments. During this period, it received 1,500.00 Collaborative workplaces supported by use of seamless wireless connectivity, high-speed
investments in Insuretech, Lending and Digital 1,000.00 internet and additional space for placing tech equipment have become a must-have facility.
Wallet sub-sectors. 500.00
Fintech companies have seen a spectacular rise -
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Key Deals impacting Real Estate
in the past 4-5 years and investment in the top 20
Year SoftBank Group’s Vision Fund invests over $200 million in PolicyBazaar
companies in this sector has touched around 4 Total Investments in Fintech
Billion USD in the last 2 years. Note: The 2018 figures are upto the month of September Source: www.techinasia.com The Indian online insurance aggregator “PolicyBazaar” raised $200 million from Japanese SoftBank Group’s Vision Fund in May 2018.
Post this, in June 2018, it was reported that PolicyBazaar is aiming to add about 2,500 jobs until FY 2018-19 end and has also leased
Alibaba Group, Ant Financial Services Group, MediaTek’s, Sofbank. and Berkshire Hathaway 130,000 sq. ft. of office space in Gurgaon.
have purchased stakes in India’s Paytm
Paytm purchased 40,468 sq. m (10 acres) land for a mega-campus development in Noida, Delhi in India
Paytm (founded in August 2010 with an initial investment of $2 million), has received an investment of $3.1 billion till 3Q2018.
In 1H18, Paytm a digital payment company purchased 10 acres of land in Noida to establish a new campus that is likely to
The Indian e-commerce payment system and digital wallet company has received investments from domestic and international
accommodate 15,000 employees. This land deal is one of the largest in recent times involving an Indian consumer internet startup.
powerhouses including Ratan Tata, Alibaba Group, Ant Financial Services Group, MediaTek’s, SoftBank and recently Berkshire Hathaway. Source: Compiled from Secondary Sources
Trends in the E-Commerce Industry
FinTech: Medium to Long term Outlook
Current status of the e-commerce industry
Fintech has made rapid inroads into the real estate industry.
In India, all sectors have accepted fintech positively, negating Digital commerce market in India is estimated to have grown at a CAGR of 34% between 2011 and 2017 to reach Rs. 2.04 lakh crore by
the general notion of fintech as a threat to their business. the end of December 2017. It is likely to reach Rs. 2.37 lakh crore by December 2018. (Source: Internet and Mobile Association of India
Traditional firms are collaborating with fintech startups (IAMAI)). The prominent categories in digital commerce market include online travel industry, e-tailing, utility services, online bookings
to develop new services and solutions to enrich their user etc. Due to the strong growth prospects of the E-Commerce sector, it has attracted institutional investors thus paving the way for
experiences at a relatively lower cost and faster pace. National deeper penetration and business expansion by these companies. However, it is now being witnessed that in the retail sector omni-
Association of Software and Services Companies (NASSCOM) channel format is gaining popularity. Cross over investment transactions from both online and offline retailers are taking place. Online
retailers are investing in brick and mortar retail so as to leverage the network of
forecasts that the Indian fintech software market will touch
already existing physical stores of offline retailers. In this way they are creating Company Investor/JV Year
$2.4 billion by 2020 from the current approximately $1.2 billion.
a deeper connect with the consumers and benefitting in terms of offering Shoppers Stop Amazon 2017
In a liberalised environment, this provides some impressive
a seamless experience across multi channels. On the other hand, physical More Amazon, Samara Capital 2018
opportunities for national and global players to venture,
retailers are investing in online retailing so as to cover all the geographies and
collaborate and participate in. Flipkart Walmart 2018
benefit from their technological platform.
In the following section growth of the E-Commerce Industry Paytm Mall SoftBank, Alibaba 2018
Few examples of investment deals in E-commerce sector including the cross
and its impact on Commercial real estate has been studied. Grofers SoftBank 2018
over deals in retail sector are listed alongside:
Impact of E-tailing on Commercial Office Sector On the one hand it has led to consolidation in the sector and on the

E-tailing is a major category in the e-commerce other it has provided the required capital and resources for online
segment and it is witnessing take up of office space in retailers to expand further.
prominent areas in Delhi NCR, Hyderabad, Chennai, The e-tailing segment has witnessed some major office transactions in the
Mumbai and Bangalore. In order to capture maximum last couple of years, including space take up by Alibaba Group, Nearbuy
share of the consumer’s wallet some significant mergers and Amazon in Delhi NCR. In recent times, Amazon also signed up for
and acquisitions in the e-tailing segment have taken office spaces in Mumbai, Hyderabad, Pune, Bangalore and Chennai
place. For e.g. Walmart’s investment in Flipkart has showcasing expansion by the e-commerce company, in order to compete
transformed the landscape of online retailing with focus in the highly competitive e-tailing space. It also opened its first customer
now shifting to Omni-channel retailing. service facility in North India at Candor Tech Space in Noida.
Steady demand for office space by E-commerce companies owing to its increasing popularity and rising consumer base has been
witnessed. While the period between 2012-16 saw space absorption at 3-4% of the total demand across various sectors, it jumped to
a high of 7% in 2017. The first half of 2018 has already seen a 3% contribution by the sector and we see it stabilizing at 6-7% levels for
the year 2018. (Source: JLL Research, 1H2018).
• Increasing requirement of office space for diverse uses by E-commerce players: E-commerce companies are generating real
estate demand for opening their corporate offices, technology development centers as well as customer service centers and back
end operations. The main factors while considering real estate acquisitions by these companies are:
Location with support Scalability Availability of Financial

infrastructure in place options talent pool feasibility
• E-commerce registering demand for Co-working spaces: E-commerce players are also considering co-working spaces for some
of their operations due to flexibility and cost savings offered by them. Example: Foodpanda has taken up 2,000 seats in GoWork’s
centre at Udyog Vihar in Gurgaon under the ‘built to suit’ enterprise format. This is one of the major transactions in which a large
number of seats have been occupied by a single organization in a Co-working space.
• E-commerce sector generating office space demand from Logistics providers: Logistics
JLL
play a crucial role in the successful functioning of an E-commerce company. In order to cater View
E-commerce is
to the requirements of E-commerce players courier companies have launched dedicated
divisions to focus exclusively on them. Therefore, growing demand of E-commerce companies
not only generating its
is positively impacting the business of logistics solution providers. This in turn is generating own real estate demand,
demand for additional office space from the logistic companies as well. For instance, Ecom it is driving increased
Express, a logistics solution provider to E-commerce companies, moved to its new corporate space requirements
office spanning across more than 36,000 sq.ft. at Ambience Tower in Gurgaon. from logistics solution
providers as well.
Not only is the amount of space take up increasing, assuring ‘Wellness’ of employees who
occupy such work spaces, is becoming increasingly important for developers. In the following
section a brief on the ‘Well Certified’ Building concept has been provided.
Inception of the Well Certified Building Concept
While the concept of sustainability and green buildings is now well

established in the real estate markets, a new standard of holistic ‘Wellness’
is gaining traction for office buildings. Since a healthy workplace and
business performance are directly correlated, developers have started
exploring new and innovative methods to promote wellness in their office
assets. And certification of wellness is the new buzzword for
promoting health in buildings globally and in India.
Although these figures are
‘Wellness’ at workplace helps reduce employee costs archetypes, the model signifies
Facility managers often refer to the ‘3-30-300’ principle to explain a firm’s recurring that the greatest financial savings
cost. As per ‘3-30-300’ model, an organization spends approximately USD 3 per of wellness at the workplace
sq.ft. per month for utilities and amenities, USD 30 per sq.ft. per month for rent and is not saving on energy costs.
maintenance and USD 300 per sq.ft. per month on human capital. The best workplace strategy is
to identify measures that help
improve employee productivity.
Factors like reduced absenteeism,
Certificate of Wellness Why is the concept gaining popularity? ‘3-30-300’
principle for
3 3O 300 greater employee retention and
employee satisfaction go a long
Till now, office goers have been happy with basic amenities
(USD/sq.ft.) (USD/sq.ft.) (USD/sq.ft.) way in enhancing productivity.
provided at work. If the lighting and heating worked and enhancing
Building Cost of Rentals Cost of Human Adopting the wellness goals
In 2014, the US-based International WELL Building they had a desk to sit at they were satisfied. However, of productivity of
Management Capital
Institute (IWBI) developed a pioneering standard late, expectations have been growing. Increased access human capital addresses these factors, helping
(for both office buildings and their interiors) that to knowledge and data on building performance and a increase productivity over time.
promotes and advances social, economic and building’s impact on health are leading to more engaged Since the cost of human capital is maximum, it is very important to adopt wellness goals
which will reduce attrition rates and enhance productivity at work.
environmental well-being. Keeping sustainability occupants demanding much more from developers of
as the main objective, the WELL Certification office buildings.
addresses workplace environment by enhancing Tangible and intangible benefits of WELL Certifications
health and wellness of employees. Also, factors such as poor quality office environment,
insufficient ventilation and noisy layouts are leading to With wellness at workplace becoming an increasingly important factor, any benefits and savings over the project life cycle must be
medical conditions such as ‘sick building syndrome’ with analysed from the occupier, owner and investor perspective. Enhancing productivity remains a key issue among corporate occupiers
Key focus areas of WELL Certification an adverse impact on the health of employees. Common and industry experts through their global experience, state that WELL Certification is able to benefit firms in the following manner:
ailments include back pain, lethargy, headaches, eye strain
and stress disorders to name a few. Hence there is a growing Productivity enhancements
Enhances productivity Performance efficiencies Ensures optimum cost and monetary savings over
emphasis now on wellness. The provision of air filtration utilization by ensuring
by 8-11% with improved increase through the life cycle of an asset are
Fresh Hygienic Sufficient systems, better water quality in the building, improved lighting employee happiness
indoor quality, controlled temperature directly related to the return on
air water light design, active furnishings and office layouts by developers,
collaborative office layouts and noise reduction and saving on new investments for the owner and
are just some of the measures which will make the workplace recruitment costs
Nourishment, fitness and and reduction of sickness occupiers.
healthier and better. This will also pave the way towards getting
comfort of the occupiers absentees
WELL Certification. Firms who occupy their workspace in the
initial design or construction stage will have the benefit of a
fresh canvas on which to work with a developer. Those with For the investor and property owners, WELL Certification offers significant
It also seeks to create wellness of the mind older spaces however, should not be deterred as modifications benefits including:
through greater physical comfort. The concept of can be made in all buildings.
wellness outlined by WELL Certification is a natural Attracting tenants capable of paying a Increased tenant retention saves new
progression from Sustainable Development Goals The concept is gaining popularity among developers and 5% - 20% premium on existing market tenant search cost which is approximately
and the Green Buildings concept. Sustainable occupiers as apart from the wellbeing aspect, it also helps rent, owing to building’s wellness, green 0.5% - 20% of the annual rental.
reduce an organization’s financial liabilities which come with and healthy features. Overall WELL certified
Development Goals includes good health and
A 30%-45% increase in possibility buildings can result in higher
wellbeing and Green Buildings focused largely on absenteeism and lack of good health among employees.
Ensuring lower vacancy compared of signing mid to long term lease returns, greater marketability,
reducing the carbon footprint. However, there was Research shows that employee costs are the highest
with those without a certification. These contracts, helps in securing steady faster leasing and sales
a need to have a greater and dedicated focus on compared with other costs, hence happiness at work
assets also perform better during market rental incomes even during market velocity. Thus, the cost for
the overall wellness aspect. Based on many years through application of wellness principles is very critical.
downturn. Leading corporates in India uncertainties. inclusion of wellness features
of research and inputs from the medical, scientific Moreover, during the last few years, the industry has witnessed
are portraying WELL Core & Shell as is a nominal percentage of the
and real estate communities, the WELL Certification increased availability of energy-efficient alternatives to Greater demand from organized real
their fundamental requirements when overall tangible benefits and
concept was born. The governing principle was the traditional construction material, which is available at almost estate investors (including real estate
scouting for office spaces. monetary returns.
merger of health sciences with building sciences. the same cost. funds and REITs owners) offering higher
resale values for high-quality buildings
thereby the high cost incurred for adding
WELL features is recovered over time.
Source: Compiled from secondary sources
WELL Certification in India WELL Certified Projects in India by the IWBI
WELL Certification which gained Council (USGBC) and The Energy and Following the above initiative, in 2016, Tata
prominence in the US in 2013-14 is still a Resources Institute (TERI) from India, Housing partnered with the U.S. Green Building Project Size Date
Project Name City State Project Type Sector
relatively new concept in India but picking partnered to certify their buildings to the Council (USGBC) for Well Building Certification (sq. ft.) Registered
up pace now. The journey towards well WELL Building Standard. The initial pilot (WELL) and brought in 20 million sq. ft. of LEED-
certification has been driven by some key projects considered for upgradation were and WELL-certified homes belonging to various Prestige Falcon New and Existing Commercial &
4,92,000 Bengaluru Karnataka 29-Jul-15
Vrindavan Chandrodaya Temple, Tata residential development projects. Towers Buildings Institutional Office
organizations.
Housing residential projects, the Paharpur
In 2015, the International Well Building IGBC has now introduced its own ‘IGBC Health
Business Centre (PBC) and Group 10 Paharpur Business New and Existing Commercial &
Institute (IWBI), U.S. Green Building and Well-being’ Certification in India. 48,469 New Delhi Delhi 11-Sep-15
Technologies properties. Centre Interiors Institutional Office
New and Existing

GBCI India Uttar Commercial &
Timeline for Sustainable Development Initiatives in India 3,978 Noida Interiors in a Core & 11-Oct-17
Corporate Office Pradesh Institutional Office
Shell Building
Artesia -K. Raheja Commercial &
Phase 1 Phase 2 Phase 3 Corp Residential
Tower
4,92,631 Mumbai Maharashtra Core & Shell 12-Feb-16
Institutional Office
Establishment of institutions by the Formation of institutions for promotion Inception of Wellness for occupiers
government to encourage sustainability of Green Building developments gains traction
Group10 Office New and Existing Commercial &
7,956 Gurgaon Haryana 22-Dec-16
Gurgaon Interiors Institutional Office
1974 The Energy and Resources 2001 Indian Green Building 2007 Leadership in Energy and
Institute (TERI) Council for Business Council (IGBC) was formed by the Environmental Design (LEED-INDIA) Commercial &
Sustainability was formed in India Confederation of Indian Industry (CII) Green Building Rating System was Mint Towers 16,909 Chennai Tamil Nadu Core & Shell 8-Sep-18
established in India
1987 The concept that ‘Sustainable 2002 Bureau of Energy
Development is development that Efficiency was created under the 2014 International WELL Building Citi Enclave
Phase 6 C
19,677 Pune Maharashtra
New and Existing
17-Jul-17
Commercial &
meets the needs of the present without provisions of the nation’s 2001 Institute (IWBI) launched WELL Interiors Institutional Office
compromising the ability of future Energy Conservation Act. Building Standard
generations to meet their own needs’ New and Existing Commercial &
was framed at the United Nations
2007 The Green Buildings Rating 2015 The IWBI, U.S. Green Private Project 12,00,000 Bengaluru Karnataka
Interiors
16-Jun-16
System India (GRIHA) framework was Building Council (USGBC) and TERI,
1992 World Business Council for initially developed by TERI partnered to certify their buildings to New and Existing Commercial &
Sustainable Development (WBCSD) the WELL Building Standard. Private Project 18,950 Mumbai Maharashtra 10-May-18
Interiors Institutional Office
was established in Switzerland
2016-18 IGBC launched ‘IGBC
1993 U.S. Green Building Council Health and Well-being’ Certification Private Project 12,00,000 Thane Maharashtra Core & Shell 5-Jan-17
Multifamily Residential
- the first Green Building Council was (Pilot)
founded in the US
Source: International WELL Building Institute (IWBI) website, November 2018
The green building initiatives in India which started in 2001 much before the onset of the well certification movement, has been
showing significant traction during the last 10 years. As of May 2018, IGBC reported that India has more than 4,500 green
certified buildings. This stock represents about 5 billion sq. ft. of built-up space which has the greatest potential to earn
wellness certification in the future.
JAMMU & KASHMIR

3 Projects | 1 million sq.ft. IGBC’s Reach & Range
HIMACHAL PRADESH Green Building Footprint in India

15 Projects | 9 million sq.ft.
PUNJAB
under IGBC, 1H18
5 Billion sq.ft. of Green Building Footprint
UTTARAKHAND
Outlook
NCR DELHI
HARYANA 223 Projects |
65 million sq.ft.
The JLL Project Development Services team and Energy and
Sustainability Service team worked together for the JLL Shanghai Office
RAJASTHAN UTTAR PRADESH With building compliances in India
and earned the first WELL Platinum Certification for any office in the Asia-
92 Projects | 106 million sq.ft. 441 Projects | 1417 million sq.ft.
NORTH EAST
getting stringent and developers being
Pacific region.
22 Projects | 13 million sq.ft. compelled to come up with sustainable
BIHAR
8 Projects | 4 million sq.ft. Leveraging on their extensive experience, the team has also successfully developments, the need of the hour is
collaborated on the Design, Execution and Facility Management aspects to adopt such principles. Increasingly,
JHARKHAND well buildings and green developments
GUJARAT 14 Projects | 8 million sq.ft. to earn a WELL Certification for the JLL TDIM CoE Office located in
MADHYA PRADESH in India are key concerns in many of
280 Projects | 726 million sq.ft. 36 Projects | 52 million sq.ft. WEST BENGAL Bengaluru as well.
305 Projects | 170 million sq.ft. the government initiatives including
CHHATTISGARH Smart Cities Mission, Pradhan Mantri
15 Projects | 2 million sq.ft. The Paharpur Business Centre (PBC) in New Delhi, is an old stand-alone Awas Yojana (PMAY) and Atal Mission for
ORISSA building that has been retrofitted to meet the green aspect of the building Rejuvenation and Urban Transformation
31 Projects | 5 million sq.ft. and ensure wellness of its occupants. (AMRUT). These government initiatives
MAHARASHTRA and the various measures already
1333 Projects | 1435 million sq.ft. In a recent update from IGBC, as PBC offers 24×7 furnished and managed offices with 27 support services,
on 30 August 2018, India has more flexible user space, 1500+ air purifying plants and an ISO 22000 certified undertaken by private developers and
TELANGANA
than 4,794 Green Building projects kitchen. To ensure good health of its occupants, the firm periodically MNCs lead us to hold an optimistic
with a footprint of over 6.33 bn sq.ft. organizes health check-up camps and meditation sessions. PBC is one of outlook for green buildings with ‘WELL
ANDHRA PRADESH Certifications’ in India.
registered with the Indian Green the first commercial Indian buildings to register for WELL Pilot Certification.
GOA Building Council (IGBC). Of these 1,469
28 Projects | 4 million sq.ft. Green Building projects are certified
KARNATAKA and fully functional in India.
TAMIL NADU
402 Projects |
344 million sq.ft.
KERALA
117 Projects |
24 million sq.ft.
JLL TDIM CoE Office, Bengaluru JLL Office, Shanghai
Source: IGBC newsletter ‘Green Habitat’, May 2018.
Conclusion
Co-working spaces have slowly increased their footprint in This report has highlighted that apart from physical comfort,
occupier share and will remain a key driver for the future of new age buildings will need to address the concept of overall
work spaces in India. With its inherent cost benefits, flexible wellness of the body and mind. It has touched upon the concept
arrangements, superior infrastructure and networking of Well Certified Buildings - a step forward from sustainable
opportunities their popularity will indeed grow. A few challenges and green spaces- which will set a new standard for office
to their growth momentum are however being witnessed as spaces in the future. Such buildings will not only ensure happy
data privacy issues have surfaced. work experiences, they will also ensure tenant retention and
enhanced productivity.
Technology employed at workspaces is slowly becoming a
significant differentiator. Co-working spaces are now equipped As the co-working concept gains momentum in India, interest
with technologically advanced infrastructure which helps from large scale developers as well as operators is on the rise
employees attain higher efficiency and maximizes the firm’s and institutional private equity investors as well as individual
productivity. Whether it be in the form of smart work stations investors are looking keenly at this sector. Corporates will be
with sensor lights, app based parking, short duration meeting able to reap the benefits of reduced attrition rates through
rooms or robot receptionists, the first adaptors of these higher employee satisfaction. The cyclical trend of businesses
technologies will stand to benefit. prospering through highly enabled work spaces and feeding
back their revenues to aid further enhancements in the office
While technology enabled workspaces are changing the
sector, will continue unabated.
experience of working, fintech per se, is playing a key role in the
start-up world. Fintech incubators and accelerators have created
a new demand for latest office solutions and though the amount
of space take up may not be voluminous, they are creating a
niche demand for small office spaces and co-working spaces.
About JLL
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. Our vision is to
reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions.
In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with
operations in over 80 countries and a global workforce of 88,000 as of September 30, 2018. JLL is the brand name, and a registered
trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com
About JLL India
JLL is India’s premier and largest professional services firm specializing in real estate. With audited revenues at over INR 3400 crores for
FY 2017-18, the Firm has grown from strength to strength over the last 20 years in the country. JLL India has an extensive geographic
footprint across 10 major cities (Ahmedabad, Delhi, Mumbai, Bengaluru, Pune, Chennai, Hyderabad, Kolkata, Kochi and Coimbatore)
and presence in over 130 tier II & III locations with cumulative strength of over 10,000 staff. It provides investors, developers, local
corporates and multinational companies with a comprehensive range of services. This includes research, strategic advisory &
consultancy, capital markets, transaction management, project & development services, integrated facilities management and
property & asset management. These services cover various asset classes such as commercial, residential, industrial, retail, warehouse
and logistics, hospitality, healthcare, senior living and education.
JLL India won the Five-Star Award for Best Property Consultancy at the International Property Awards Asia Pacific 2018 -19. The Firm
is also recognised amongst the Top 100 Best Places to Work in India for two consecutive years in 2017 & 2018 in the annual survey
of ‘India’s Best Companies to Work For’ - a joint study conducted by Great Place to Work® and The Economic Times. It has also been
acknowledged as ‘Property Consultant of the Decade’ at the 10th CNBC-Awaaz Real Estate Awards 2015. For further information,
please visit www.jll.co.in
For Research Enquiries Business Enquiries
Dr. Samantak Das Dr Subash Bhola Kawalpreet Singh

Chief Economist and Head Director Director - Corporate Solutions
Research & REIS REIS Operations Marketing
samantak.das@ap.jll.com subash.bhola@ap.jll.com Kawalpreet.Singh@ap.jll.com
Author Editor
Srija Banerjee Shweta Kakkar Ubaid Ansari MRICS Niharika Bisaria
Assistant Manager Senior Manager Manager Chief Editor
Research & REIS Research & REIS Research & REIS Research Publications
srija.banerjee@ap.jll.com shweta.kakkar@ap.jll.com ubaid.ansari@ap.jll.com niharika.bisaria@ap.jll.com
jll.co.in
Jones Lang LaSalle © 2018 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or
warranty is made to the accuracy thereof.
Emerging Trends in India’s Office Sector - Occupier Perspective

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Emerging Trends

In India’s Office Sector

New Completions Net Absorption Vacancy Rate

70% 29% 24% 15% 15% 17% 15% Miscellaneous

The Indian government has placed

Till 3Q 2017 Till 3Q 2018 infrastructure of India. Fintech companies

Enhanced Overall cost

Approximately Small and Medium

• No longer is co-working space considered suitable

• Co-working service providers are showing interest

• More and more corporate occupiers are planning

• Growth in fintech tech startups is increasing the

• E-commerce players are considering co-working

• With employee wellness gaining increased

In this section, the report looks at some of the key emerging

Most of the co-working spaces in cities like Bengaluru,

It is in general essential for a

• It has plans to expand to emerging cities

INVESTMENTS AND ACQUISTIONS BENEFITTING THE COWORKING PLAYERS

“Over the next few years, Workplace +Technology

Components Tools Outcome/Benefits

Desk An App that enables booking of desks,

The future of workplace would be all about human

Sector Start-up Partnered with Purpose Sector Company Investor(s)

deals from the top ten deals concluded in Asia, 2,500.00

Source: Compiled from Secondary Sources

Location with support Scalability Availability of Financial

While the concept of sustainability and green buildings is now well

Source: Compiled from secondary sources

New and Existing

JAMMU & KASHMIR

HIMACHAL PRADESH Green Building Footprint in India

JLL TDIM CoE Office, Bengaluru JLL Office, Shanghai

Source: IGBC newsletter ‘Green Habitat’, May 2018.

About JLL India

For Research Enquiries Business Enquiries

Dr. Samantak Das Dr Subash Bhola Kawalpreet Singh

Emerging Trends in India’s Office Sector - Occupier Perspective

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