Commercial Real Estate Strategies for Start-ups in India
India’s demographic and economic state makes it a budding ground for start-ups. We have a large percentage of enterprising youth in our population coupled with a growing e-commerce and IT/ITES Sector to support the growth of start-ups. Real estate strategies play a major role in the success and failure of any enterprise. However, in the case of start-ups, real estate decisions are of greater importance. Start-ups lack customer brand recognition and financial cushioning that can safeguard them if they choose a wrong real estate strategy.
Here are a few key factors that start-ups must keep in mind while making real estate decisions:
Cost and lease terms: As the profitability of a start-up venture is uncertain, it is extremely vital that real estate decisions are made so as to incur minimum costs. Real estate decision makers must try to negotiate with landlords to obtain flexible lease terms as this can further reduce costs. Early entrepreneurs should look for properties having negligible lock-in periods, low initial security deposits and affordable lease rates.
Location: Real estate cost differs drastically among the central city locations and suburbs. Location affects the image, scalability, talent attraction and retention, commutability and life cycle of the start–up business. It is also important to realize the returns that the start-up will be able to generate on account of its location. For instance, a cafeteria will generate better revenue if located near a college. However, the same cafeteria may not be able to generate a steady clientele if located on a highway. Suburban locations command significantly lower rentals and thereby, cut costs and boost profitability, making them an ideal choice for start-ups.