The most common response we hear, once a client confirms that they have a requirement for a new office, is to send them a list of options. This seems, for clients, the easy way to do things. We feel a better way for the client is to do a little more research / talking / homework before seeing any option. A client looking for an office has to be keep in mind a few points as follows:

Location : To start with clients need to narrow down to a tentative area for the new office.

• Office locations prevalent in demand are Hitec city, Madhapur, Kondapur, Gachibowli, Nankramguda, Raidurg, Kaveri Hills, Jubilee Hills, Banjara Hills, Begumpet, Somajiguda, Nagarajuna circle, Secunderabad, Abids etc.
• Most of the modern buildings have been developed towards Hitec city side of the city.
• The core areas have mostly older buildings.
• Mid-areas like Banjara & Jubilee Hills have a combination of old and new buildings.

Area : Clients need to understand the various terminologies used to define areas:

• Carpet areas: Basically area within the office walls which can be carpeted. Normally this area is 70-80% of the super built-up area.
• Built-up area: This is carpet area plus wall thickness and proportionate area of specific corridors, if any, made to split the floor plan.
• Super built-up area: This is built-up area plus proportionate areas of common corridors / staircases, lifts, ramps, tanks etc.
• Normally the parking areas / basements are not added in calculating super built-up areas.

Fitouts or bare shell : Office spaces are categorized into many types as follows:

• Bare shell means the landlord provides the bare space and the tenant does the entire investment on interiors. The bare shell space will be completed with walls, facade, common area flooring, electrical panel & meters, water and drain connections. In some case the landlord may provide the internal office flooring and toilets.
• Extended bare shell means landlord provides bare shell space (as defined above) with add-ons like DG Backup and toilets. The DG backup facility is connected to the common panel from where the tenant has to run internal wiring as per their interior plan. The tenant does the entire investment on interiors.
• Warm shell means landlord provides bare space with air-conditioning and DG backup facilities. Air-conditioning is either provided as split units or central chiller with a floor level AHU. The internal ducting as per interiors plan would be the tenant's scope. The DG backup facility is connected to the common panel from where the tenant has to run internal wiring as per their interiors plan. In some options, the landlords also provide toilets.
• Built-to-suit (BTS) fitted out space means landlords provides a fully furnished office space as per tenant's choice. This is almost a turnkey solution being provided by the landlord. Some interior elements like server, access control and UPS for systems will be part of the tenant's scope.
• Fully furnished office means landlords provides a furnished space with older fitouts which they might have done for an earlier tenant a few years back or bought out fitouts from the previous tenants. Here again some interior elements like server, access control and UPS for individual systems will be part of the tenant's scope.
• Built-to-suit (BTS) facilities: These are rare deals now where a client who has a large space requirement signs a BTS contract wherein the entire complex or significant part of the complex is tailor made to the tenant's choice. Such deals may also cover interior fitouts.

Budget :

• For tenants, if they require a fully furnished office space then, a decision needs to be taken as to whether they need a brand new fitted out office space or older fitted out office space. The former will always be more expensive than the latter and would require the tenant to offer lock-in periods to justify the landlord's investment. On the other hand a newly fitted out office space would be as per the tenant's choice of layout and corporate color schemes. Rental budget also depends on the choice of location.
• For buyers the budget will depend on location and buildings specs of bare or warm shell.

Number of workstations : Some companies are specific that they need a certain number of workstations but they may not have complete clarity on the exact space that is required for this requirement. Our inputs are as follows:

• IT market is divided into software and BPO type office setup. Five years back, a software occupant would plan 100sft per employee / workstation. Incase a client needed 100 workstations then area required was 10000 sft.
• Over the past few years, competition and cost cuttings measures have reduced the area per employee for software to 60-75ft. In today's scenario a 100-seater office space would be developed in 7500-8500sft of office space.
• In today's scenario a 100-seater BPO requirement would be developed in 5000-6000sft of office space.
• Challenge remains for companies who want 100-seater offices in lesser sft and older fitted out offices. This is a tricky requirement and has to be handled on a case-to-case basis.

 

SEZ or Non-SEZ's : In today's age a lot of companies want to operate from SEZ's to take advantage of tax benefits available. Some points to be considered are as follows:

• Before a company decides on whether to locate itself in a SEZ or not, we recommend that they should evaluate whether their company is SEZ ready. This evaluation is necessary since the SEZ route would involve the company approaching the SEZ authorities with export projections for atleast the next 5 years. The evaluation could be done with tax and management consultants.
• The current IT SEZ format does not seem conducive for smaller or medium sized IT companies.
• The current SEZ format seems to be better for companies with 3rd party export billings. Companies, which are basically serving their parent companies aboard, may not be keen to get into SEZ's.
• Getting into an SEZ is a comprehensive process and so is the exit mechanism.
• Currently IT SEZ's properties are slightly more expensive than non-SEZ properties.

 

Parking :

• Newer office complexes would be able to provide 1 car park for every 1000-sft space leased.
• Some modern complexes are planned with even better parking ratios.
• Older buildings may not be able to cater to such parking requirements.
• Companies need to have clarity on number of car parks & cost, if any, associated with it while evaluating options.
• In some property options the 2-wheeler parks have to be accommodated in the car-parking ratio itself, while in some other options landlords might offer separate 2-wheeler parks independent of the car parks.

 

Power requirements : On a thumb rule basis power requirements in bare shell spaces would range around 1kva per 100 sft of leased space. In warm shell space the power requirements would be significantly lower since air-conditioning chiller is part of the landlords scope.

DG back-up : Clients should check if the back-up is adequate to cover the power requirements of the office. It is also advisable to check if back-up is provided through a single genset or multiple units.

Employee perspective :

• Most of the corporates prefer to be located in the core or mid areas of the city.
• Most of the IT companies prefer to be located in Hitec city only.
• There is no hard and fast rule about this and companies choose as per their requirements.
• For some companies the building profile is important to attract the best available talent hence modern buildings are required.

 

Leveraging : Incase a client needs to buy space then they should first evaluate their leveraging capability with banks / funding institutions before starting a search. This aspect is important since a lot of clients are not aware of their budget or funding options. For e.g. currently banks do not offer loans to NRI's to buy commercial properties.

It always helps to understand an office requirement in detail before seeing options. It will always save time for everyone involved and could also help any possible heartburn issues. The above research is just the beginning of the entire process of selecting a new office.