A paradigm shift in retail: The emergence of shop-cum-offices

As the commercial real estate sector surges with unparalleled growth, a new trend is swiftly emerging: the rise of SCO (shopping-cum-office) complexes. These innovative developments are revolutionizing urban landscapes by bridging the traditional gap between retail and office spaces. In an era where adaptability and versatility are paramount, SCO complexes offer a seamless blend of commerce and corporate, catering to the evolving needs of businesses and consumers alike. In the sphere of commercial real estate, likely to achieve historic highs with an expected 7-8 percent growth in 2024 as per the industry expert. With their dynamic fusion of retail vibrancy and professional efficiency, SCO complexes stand as beacons of innovation, poised to elevate the sector of commercial real estate to new heights.

Commenting on the same, Ashish Sharma, AVP operations, Brahma Group, said, “The paradigm shift towards shop-cum-office spaces represents a groundbreaking development in the Indian real estate landscape, especially in vibrant urban hubs like Delhi-NCR. These flexible spaces seamlessly combine the ease of retail with the efficiency of office setups, meeting the modern enterprise’s dual demands for cost-effectiveness and collaborative functionality. A report by Knight Frank highlights a significant 44% year-over-year increase in office space leasing across eight major cities, underscoring the growing appeal of the SCO model. As businesses continue to evolve and seek innovation, SCO spaces are poised to meet these changing needs, ensuring continued growth and relevance in the dynamic marketplace.”

In the digital era, traditional brick-and-mortar retailers confront distinct challenges amid the relentless expansion of e-commerce and evolving consumer tastes. To navigate this landscape and flourish, businesses are embarking on innovative strategies to elevate their offerings and enrich customer experiences. Among these strategies is the integration of office spaces within retail establishments, forging a symbiotic relationship that fosters mutual benefits for businesses and consumers alike. This convergence represents a dynamic response to changing market dynamics, signaling a shift towards enhanced collaboration and adaptability in the retail landscape.

Abhishek Trehan, executive director, Trehan Iris, says, “The emergence of Shop-Cum-Office spaces has transformed the Indian commercial real estate landscape by combining retail and office spaces. According to a recent report by Knight Frank, office space transactions surged with a remarkable 43% year-on-year expansion in Q1 2024 across India’s leading eight markets. SCO projects offer a cost-effective solution compared to standalone retail or office spaces and also contribute to growth and expansion, which further impacts the economy. The availability of basic facilities within the same complex also drives growth for the retail business. As more businesses recognize the advantages of SCO properties, investment in this segment is likely to increase, driving up pricing and rental yields. However, in the foreseeable future, the concept of mixed-use commercial real estate is expected to evolve, making SCOs a valuable asset to invest in.”

SCOs represent the epitome of this integration, offering a harmonious merger of retail and office spaces in a single dynamic setting. The close proximity of multiple shops and offices cultivates a sense of community, transforming shopping into an immersive and engaging activity.

Moreover, SCOs often serve as hubs for events and workshops, further enhancing the vibrant atmosphere and facilitating meaningful connections with customers. These multifunctional spaces not only meet the practical needs of businesses but also cater to the experiential demands of modern consumers, elevating the overall appeal of retail destinations.

Yashank Wason, managing director of Royal Green Realty shared, “SCOs are becoming the future of the retail sector, as it offers a unique blend of retail and office space within a single building that caters to the evolving needs of the industry. The presence of multiple businesses at one location creates a sense of convenience for customers, enabling them to explore several shops or offices in one visit. This way it provides a strategic advantage to the businesses seeking heightened visibility and expanded customer base. Particularly Gurugram has evolved as an IT hub and has attracted a plethora of multinational corporations and startups. According to Cushman and Wakefield’s reports for the fourth quarter of the previous year, India experienced an 84% year-over-year surge in commercial leasing, culminating in a record-breaking 27.4 million sq-ft.

The strong demand for commercial spaces in Gurugram especially in Sector 37D translates to attractive rental yields and substantial returns on investment. Furthermore, investing in SCO spaces grants businesses and employees access to modern infrastructure, including healthcare facilities, recreational options, and world-class shopping centers, which further maintains the overall work-life balance of the buyers. Dwarka Expressway has also emerged as a prime destination hub for SCO spaces, along with various other nearby landmark developments that will further boost the demand for such establishments among buyers and investors, he added.

From a business perspective, SCO spaces offer significant advantages in terms of cost-effectiveness and efficiency. By consolidating retail and office functions in one location, businesses can streamline operations and optimize resource utilization. This self-contained ecosystem benefits employees by providing convenient access to amenities and services, ultimately enhancing productivity and satisfaction.

The emergence of SCO developments has profoundly impacted India’s commercial real estate sector, stimulating economic growth and job creation. These versatile spaces have attracted businesses from various industries, injecting vitality into local economies and revitalizing urban landscapes. Moreover, the integration of retail and office functions has encouraged community engagement and collaboration, contributing to the social fabric of neighborhoods and cities.

Looking ahead, the trend of integrating retail and office spaces is expected to continue, driven by evolving consumer preferences and technological advancements with sustainability. Emerging technologies and design innovations will further shape the shop-cum-office segment, offering developers and businesses new opportunities for innovation and differentiation. As SCOs continue to redesign urban environments and commercial real estate markets, their pioneering potential remains unparalleled in driving growth and prosperity.