Biggest concern after COVID-19 is to bring employees back to offices: Mike Davis

The company's APAC region is aggressively looking at giving an added thrust to its occupier business across the region, a large portion of which is expected to emanate from India, says Colliers' Mike Davis.

In the wake of the pandemic, the biggest concern is to bring people back to offices and create environments that can facilitate their return. It is due to this that hybrid work and environmental, social, and governance initiatives are now percolating from the board level to real estate decision makers, Mike Davis, managing director, occupier services, Asia-Pacific, Colliers, told Moneycontrol during his recent visit to India.

Occupier services include those that consultancies provide to lessees like tenant representation, project management, real estate management services, workplace advisory, flexible workspace consulting, etc.

“The APAC region is undergoing a significant transformation in the way workspaces are perceived and utilised. The biggest concern is how to bring back people to offices and, hence, the focus on a hybrid work environment,” he said.

He also said that Colliers APAC region is aggressively looking at giving an added thrust to its occupier business across the region, a large portion of which is expected to emanate from India.

“A large share of that growth is going to come from the Indian markets. So I'm going to be here frequently… All of Asia-Pacific is performing well, certainly compared to the other global regions, but particularly within India, there's still so much runway for growth,” he said.

Growth areas

Another growth area seen in the Asia-Pacific region and in India are industrial and data centres.

“We're seeing a lot of industrial users primarily being driven out of the US evaluating their portfolios in Asia-Pacific, particularly those that had a significant presence in China. Coming out of this in the post-COVID world, I think a lot of companies have recognised the risk to their supply chains, having such a concentration of manufacturing within China, and there has been the thought that they may start to onshore or nearshore a lot of that manufacturing back to the US or potentially look at other Asian markets like Vietnam in which to shift their manufacturing,” he said.

The industrial market in India is performing well and the data centre market will continue to grow here as well, he said.

The co-working and flex space will also continue to have a role for corporate occupiers that value flexibility. “For companies valuing flexibility, co-working will continue, flex space will continue to have a role in the portfolio, but traditional leases will continue to form the core of their portfolios going forward,” he added.

Space acquisition

Sharing his views on the commercial real estate market in India, Peush Jain, managing director, office services, India, Colliers, said that this year despite global headwinds, as much as 32-38 million square feet of space is expected to get absorbed. This is because several companies have hired people in the last 6 to 12 months, but they haven't really taken up real estate based on those numbers yet.

In the days ahead, the commercial space take-up could be in the form of a hybrid space or a distributed workspace or a hub-and-spoke model. But the underlying theme is that there will be space acquisition as well.

Also, quality A-Grade commercial real estate is still available at almost $1 a square foot in India and that makes it a lucrative market, he said.

“We are also witnessing several (instances of) outsourcing work finding its way into Indian shores and that is mostly to do with the capability centres,” he said.

It is on account of this that the country may see a couple of more REITs or real estate investment trusts in the commercial space, he added.