Thought leadership: Deciphering construction cost drivers for Indian grade A commercial space
Emergence of commercial
office space in India
The concept of commercial office spaces has been prevalent in India since the early days of trade and commerce. With the expansion of cities and urbanisation, contemporary and newly emerging office spaces have grown accordingly, with high grade office space, in particular, experiencing popular demand.
As the country’s population is projected to hit 1.515 billion in 2030, office space is undergoing rapid transformation with a focus on incorporating new and contemporary aspects of design, such as the recent trend of integrating wellness components into commercial complexes to attract and maintain Generation Z.
The market demand is dynamic, reflecting improvements in building technology and the changing needs of the population.
More and more commercial developers are looking to build structures with higher floor-to-ceiling ratios because of the advantages they provide in terms of natural lighting and the ability to adapt to varying heating and cooling needs. Other commercial developments include components like Minimum Efficiency Reporting Values (MERV), integrated building management systems (IBMS) and Leadership in Energy and Environmental Design (LEED) platinum certification for environmental sustainability. These characteristics now raise the bar for commercial real estate structures in India.
Office space grading
Grading is a way to categorise and evaluate different types of office spaces based on factors including location, amenities, design and overall quality. While grading systems may vary, common office space grading categories are:
Grade A+: refers to the highest quality and most prestigious category of office buildings available in prime locations within the commercial real estate market. These buildings are characterised by their superior construction, modern design and private, first-class amenities and services.
Grade A: similar to grade A+ but with a marginal difference in the rental and occupier profile. Typically located in prime or secondary central business districts, grade A offices offer modern infrastructure, state-of-the-art facilities and excellent accessibility, often featuring high-quality finishes, advanced technology, ample parking and extensive amenities.
Grade B: whilst not matching the premium standards of grade A, these office spaces offer functional layouts and a range of facilities and amenities. Although of good quality, grade B offices are usually located in secondary business districts or prime locations with slightly less favourable characteristics than grade A spaces.
Grade C: typically situated in older buildings or less than desirable locations, these offices may have outdated infrastructure and limited amenities, requiring renovation or refurbishment. Often more affordable than grade A or B offices, these spaces attract tenants with tighter budgets as well as those who value cost-effectiveness over premium features.
An overview of the primary distinctions between the classification definitions of office spaces:
Source: Housing.com
