As we are entering the next phase of a national lockdown in India, businesses across sectors have started rethinking their strategy. Right now, it is tough to see a cut-off date and to say when situations will normalise. A lot depends on the intensity, spread and duration of the outbreak. The best way forward is to have a long-term plan for businesses to survive.
In these circumstances, trust in the ecosystem is undoubtedly of utmost importance. Trust would help rebuild relationships and reignite demand for real estate. This is the time for the business leaders to revisit all aspects of their operations. They have to re-establish confidence in their stakeholders during and after COVID-19.
On the commercial side, occupiers would need to have a ‘plan of action’ on how to return to work when there is moderate or complete relaxation on travel rules. The new normal will be defined by ‘social distancing.’ It will involve a change in the way we live, commute or work. Government policy is likely to be a critical factor that will determine the growth of office space.
The main challenge remains the safety of the employees. They are wary of returning to their office space.
Secondly, the scenario of work-from-home (WFH) is impacting office space demand. Despite the current switch to remote mass working, a physical office will maintain its importance in facilitating interaction and collaboration and ultimately for employee health, well-being and productivity. WFH affects performance and productivity, and one misses opportunities for regular interactions and connection with co-workers, regular feedback from line managers, performance management and accountability which is critical for many jobs.
With no spontaneous interaction, employees tend to feel isolated, leading to creativity blocks. Hence, innovation is always a challenge during WFH. Challenges of client proprietary technology, data privacy, and that of internet connectivity issues cannot be ignored. At the same time in cities, everyone may not have a dedicated space to WFH or ergonomic chairs which could affect employee health.
Establishing trust among stakeholders
Above all, office space tenants need to ensure a safe environment for the employees in terms of physical, mental, digital and financial. There are WHO guidelines on office space safety, adhering to which could help build trust. Developers could also get independent experts to assess the safety of the workplace.
For the same, they need to relook at their business models. They need to recalibrate the space given to leased office space. There could be changes around the redesign of spaces with a focus on social distancing, hygiene and safety.
The effective implementation of the real estate regulatory authority (RERA) will help in restoring the trust between the developers and property buyers. “It will also ensure that there are no defaults in delivery of projects”, said Hardeep Singh Puri, Housing and Urban Affairs minister, in a recent webinar. He explained that this step would help ease the burden of inventory pile-up in the sector and provide the necessary financial cushion to the developers to complete pending projects. The minister also said that the centre had issued advisories to regulate authorities of all states to extend the timeline of completing projects by six months automatically.
Occupiers have also started renegotiating their lease contracts for lower rents, an extension of the rent-free period as well as a waiver of lock-in periods. In the office market, there are discussions between occupiers and landlords, where the occupiers are asking for rental discounts on CAM charges, deferment of rental payments. While no definite trend has emerged as of now, landlords are giving a sympathetic hearing.
Hence, a return to a new normal, to office space, is only possible with greater adaptation, collaboration and communication, based on complete trust. The developers need to have clear conversations with their stakeholders and deliver on their promises with honesty and clarity. This would only benefit all the parties involved and help increase the demand for commercial space.