Convergence of retail and office real estate in India: JLL

The following is the report by Pankaj Renjhen, Managing Director – Retail Services, JLL India

“As the work culture evolves, the need to have a robust retail presence is also felt more strongly than ever before. This has led to the emergence of a new format of retail in such office agglomerations, or Office-Retail Complexes (ORCs). As India increasingly integrates into the global economy and the number of expats living in cities like Delhi-NCR, Mumbai and Bangalore increase, a business district remains incomplete without certain retail segments.”

Today, the success of a business district not only depends on its office rentals and physical infrastructure but also on a robust social infrastructure for the time-conscious office-goer. When there is a captive consumer base for retail, how can the dynamic retail sector be far behind?

Bandra-Kurla Complex and Gurgaon have not only become the de-facto CBDs in Mumbai and NCR respectively, but they are also attracting more retail. In Bangalore, taking up space in commercial office buildings in the city centre makes perfect business sense for retailers, as they not only cater to the shoppers but also make huge rental savings by opting for ORC formats over the high streets.

Going forward, the appeal of these office districts in the eyes of multinationals and premier domestic companies will be enhanced to some extent by the presence of retail.

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Ever curious and agile, the retail sector is now making inroads into modern office agglomerations. Though the format of ORCs is currently a phenomenon seen only in the major tier-I cities of India, we could soon witness the concept mushrooming in other cities as well, given its relevance and the immense benefits it offers to retailers and the corporate crowd.

Among the topics covered:

· Office-Retail Complex (ORC) – a trend in the making

· Why retail and office real estate are converging

· Standalone malls making way for mixed-use development

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Office-Retail Complex snapshots:

· Mumbai: New business districts drive the trend

F&B is the most dominant category, as it accounts for 46% of the total retail categories’ presence. Noticeably, this category has adapted to the culture that different ORCs have to offer. At BKC, expensive fine dining restaurants have made maximum inroads while at Andheri East, most F&B outlets cater to the moderately-priced fine
dining categories.

· Delhi-NCR: Gurgaon steals the show, followed by Noida and SBD

This geography outstrips all others in terms of size of the ORC retail format, and the tenant mix is also quite at variance. The dominant category here comprises of a heterogeneous mix of groceries, medical stores, property brokers, laundry, courier services, jewellery stores, printing services and stationary outlets. BFSI makes up for the next highest tenant presence, closely followed by F&B.

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· Bangalore: the only city where ORCs thrive in the CBD

The proximity to the city centre is reflective in the tenant mix in ORCs in Bangalore. While generally, Fashion does not figure prominently in the retailers who occupy such formats, in Bangalore, it is visible in the Fashion category dominating. ORCs in Bangalore are a part of the shopping centre of the city than creating a standalone office district. F&B follows a close second as this category has maximum traction with shoppers and office goers alike.