Iconic but rundown movie theatres, out-of-business amusement-cum-convention centres and historic buildings in the country are getting a snazzy makeover.
This effort of converting many old buildings into office spaces is being undertaken by global co-working giant WeWork. From the famed Galaxy Theatre, which was the first operational air-conditioned and 70 millimetre theatre in India, to 32nd Milestone, the yesteryear go-carting and arcade games hotspot in Gurgaon, and old office complexes such as Bandbox House in Mumbai are all getting converted into new age offices.
According to industry experts, such buildings mostly situated in the heart of the central business district (CBD), are finding many takers. The reason is excellent connectivity with other major areas, as well as lower lease value.
According ANAROCK data, all major co-working deals in 2018 happened around the CBD areas of cities. Global co-working giant WeWork leased major spaces in key localities across cities, including 0.12 million square feet space at Domlur in Bengaluru, 0.19 million square feet space at Bandra-Kurla Complex in Mumbai, 0.2 million square feet at Andheri in Mumbai and 0.22 million square feet at Cyber City in Gurugram, among others, ANAROCK said.
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“With absolutely no empty land parcels in most central areas, there is dearth of quality and new-age spaces with old-world charm. We can fill this gap by converting old iconic buildings into swanky spaces. Hence, the trend of revamping old buildings is likely to grow in the future as cities age and need more and more new spaces,” said Anuj Puri, chairman – ANAROCK Property Consultants.
According to Arnav Gusain, head of real estate, WeWork, India capitalises on historic and ageing architecture by redesigning buildings around the world. It is now doing it in India as well.
The company plans to eventually foray into cities such as Hyderabad, Pune and Chennai where it will find more such projects of adaptive reuse with architectural history. The company, at present, has over 4,000 desks (individual office seating spaces) at these reinvented buildings.
While the novelty or ‘retro-cool’ value of working out of an old movie theatre helps, WeWork, with its target market of millennials, also realised that it is making perfect economic sense. This is because the lease value for such buildings is lower, in some cases by almost 25 per cent, compared to a new commercial property.
“Location remains the foremost factor for determining price per desk. When compared to spaces in commercial properties in a typical business district, the rents in older landmark buildings are slightly lower than market rates, but not substantially marked down as these structures are often located in prime and central locations. In cases where in the location isn’t that desirable, we typically see a 20-25 percentage rental difference,” said Gusain.
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Also, according to industry experts, the owners of these properties also prefer such revamping as it is a cost-effective measure and gets them a good deal out of an old property which cannot be demolished in many cases due to legal and ownership issues.
“It makes absolute financial sense to restore such buildings. This is the best way to deal with ageing buildings, rather than demolishing them and creating new structures on the plots from scratch. Renovating and revamping such buildings also brings down the cost for concerned stakeholders by as much as 20 per cent over what it would cost to completely demolish and re-build. Simultaneously, keeping the ‘vibe’ of an old building helps market it more effectively, given that all things old and antique have their own unique charm and value,” added Puri.
On the other hand, as most of these spaces are centrally located, firms are able to charge a premium on rent. “While it is true that often old iconic structures are centrally located on arterial roads of a city, the rentals are always computed factoring in the advantage of location,” added Gusain.
Firms such as WeWork closely work with landlords, helping them invest in retrofitting the buildings to bring them up to date with fire and safety standards and other necessary aspects of building codes.
Globally, WeWork has several landmarked buildings in New York City, including spaces in SoHo’s Cast Iron district, the Gansevoort Market Historic district in Meatpacking district, West Chelsea. “Apart from this, WeWork has taken up historic buildings, while retaining many of the original architectural flourishes, in London and Paris. Some of these include WeWork Waterhouse Square, built on the site of the former Furnival’s Inn building of the Inns of Chancery,” Gusain added.
Source: Business Standard