By Uwin Lugoda
In Sri Lanka, buying and renting commercial real estate is a complex undertaking, worsened by the absence of a proper e-commerce platform exclusively for the sector. While there are several sites and social media pages for local real estate, they are mostly dominated by residential real estate, making it too complex for both commercial real estate owners and buyers/renters.
However, last June, Sri Lanka welcomed a new online platform exclusively for commercial real estate owners and tenants. Colombo Office Space is set to host commercial properties including A-grade, B-grade, and C-grade properties, the three segments commercial properties fall into depending on quality, location, and convenience, of which A is the highest grade.
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"Our explicit as well as longstanding experience and relationships with real estate stakeholders in Sri Lanka give us access to the finest commercial properties in the country, and it's free advertising for the property owners"[/caption]
A research conducted by the Research Intelligence Unit (RIU) in Sri Lanka last May showed that pre-Covid, the country had 1.9 million sq. ft. of Grade A commercial space, and that Grades A and B accounted for about 30% of Colombo’s office spaces. These grades have had a 90-95% occupancy for much of the last decade. Most of these could be found spread throughout Colombo 1, 2, and 3, with Colombo 5 slowly coming into the fold with the progress of Havelock City Towers.
Last August, media reports showed that Colombo’s commercial real estate market is expected to face an oversupply of office spaces in the coming years. This is set to leave many commercial property owners in trouble and in desperate need of a better platform to showcase their offering.
Therefore, according to Colombo Office Space Director Ray Smith, they developed a site that could cater to this need.
“We provide more than the walls and infrastructure you need in your office space. Our purpose is to help you discover the best commercial space while enabling property owners to reach a clientele for their property in Sri Lanka,” said Smith in an interview with The Sunday Morning Business.
He explained that he came up with the idea after having worked in the commercial real estate industry for almost 15 years and seen this gap in the local market. This gap, along with the site's former hands-on experience in the commercial real estate landscape, aims to establish them as the best entity for organisations and professionals to find the right property.
“Our explicit as well as longstanding experience and relationships with real estate stakeholders in Sri Lanka give us access to the finest commercial properties in the country, and it's free advertising for the property owners.”
As a broker himself, Smith developed the website in order to list down the properties he handled and then extended this to other property owners. He stated they are currently targeting organisations of all sizes when it comes to their tenant, from start-ups to some of the biggest corporates.
The website’s approach, transactions, relationships, and dealings are ethical and lawful, he said, positioning Colombo Office Spaces as one of the most credible and reliable real estate partners in the country.
“We work with some of the biggest commercial property owners in Sri Lanka, such as Access towers, Aitken Spence, and Astoria. We help companies find the perfect office space for them by connecting them with these owners, and help the owners better promote their properties.”
Smith expanded on the website’s ethics and transparency, stating that once a company likes a property, they are directly connected with the property owner and quoted the exact price the owner is asking for with no mark-ups. After this, Colombo Office Spaces sets up a meeting between the owner and soon-to-be tenant in a boardroom where they get to negotiate on the price.
They also give all the information about the property to the tenants, both the pros and cons. According to Smith, they try and give these companies a space where they can grow and flourish, rather than being solely focused on closing a transaction.
“We believe companies do not stay stagnant and are always growing. This is especially the case with industries like IT where the companies expand at a really fast rate; so eventually, when they need a new office space, they will reach out to us again.”
While having A-grade commercial properties like Shangri-La on the site, he went on to explain that they give priority to all the properties equally, the reason being that they are not driven by numbers. They treat every inquiry as a prospective transaction, whether the deal is for Rs. 100,000 or Rs. 1 million.
“We operate with a mindset to add value to our clients’ businesses by browsing a premium property that satisfies their needs. Our core focus is on addressing the real estate/property needs of our clients, secondarily earning profits, which reinforces our efforts in a “customer first” practice. We have an extensive bouquet of property listings in our portfolio which acts as a repository of real estate options that will swiftly and undoubtedly resolve your real estate need.”
Currently, the site has over 100 listings on it, with more being processed each day. In total, the site holds around 300 to 400 office spaces in both the Colombo and Gampaha Districts. Smith stated that this was due to them still being a small organisation with a limited physical presence.
However, he stated that commercial property owners from around Sri Lanka can freely advertise their properties on their website, and it will connect potential tenants with the owners, leaving them to co-ordinate things moving forward.
The site also promotes co-working spaces, both local (such as WORX) and international (such as Regus).
Smith stated that the site makes its revenue by charging the property owners once the transaction goes through. He explained that they mostly make revenue from the rental segment, where they charge a commission based on the market standard of Sri Lanka’s rental segment, which is a month’s rent for a one year lease; this is also their minimum requirement for commercial properties excluding co-working spaces.
They charge 10% from the co-working spaces which are usually rented for two to six months, with most renting the space for at least a year.
The site also gets a small revenue from its paid promotions, which allows property owners to promote their advertisements to be more prominent on the website, and also get them shared on social media sites like Facebook and Instagram.
Colombo Office Space, however, takes local commercial real estate a step further by also giving a platform for business owners to sell their businesses. Smith explained that he has witnessed many lucrative businesses having to wind up due to the founders migrating. Seeing this as a waste, he stated he introduced this as an option for businesses, so the owners can make some money and the business can continue.
Speaking about the site’s experience with the Covid-19 pandemic, he stated that out of three office space segments, the A-grade commercial properties, like the World Trade Centre (WTC) and Shangri-La, seem to be suffering due to their rents being high and them being occupied by international organisations. However, following the first lockdown which ended in May, the interest in C-grade buildings have been on the rise, with the owners also being far more flexible when it comes to prices, he explained.
“We are getting inquiries on these properties even now, but people are worried with the current unstable environment. If they rent out a property and there are new travel restrictions or curfews, people will anyway have to work from home.”
Smith also claimed they have had inquiries from international clients, including US-based companies, for smaller office spaces ranging from around 3,000 sq. ft. to 4,000 sq. ft. Due to these positive inquiries, he stated the market here is recovering slowly.
As for Colombo Office Space’s future plans, Smith stated that apart from increasing the number of listings on the site, he also wants to expand their physical presence to cover all of Sri Lanka and move into more business-oriented districts like Hambantota. He also showed interest in entering the tourism industry where the site can promote small hotels, guest houses, and villas in tourist hotspots like Galle and Unawatuna.
“What we also want to focus on is promoting Sri Lanka as a business investment destination for international markets; once Port City Colombo completes development, we are expecting to see many international organisations entering the country.”
"Our explicit as well as longstanding experience and relationships with real estate stakeholders in Sri Lanka give us access to the finest commercial properties in the country, and it's free advertising for the property owners"[/caption]
A research conducted by the Research Intelligence Unit (RIU) in Sri Lanka last May showed that pre-Covid, the country had 1.9 million sq. ft. of Grade A commercial space, and that Grades A and B accounted for about 30% of Colombo’s office spaces. These grades have had a 90-95% occupancy for much of the last decade. Most of these could be found spread throughout Colombo 1, 2, and 3, with Colombo 5 slowly coming into the fold with the progress of Havelock City Towers.
Last August, media reports showed that Colombo’s commercial real estate market is expected to face an oversupply of office spaces in the coming years. This is set to leave many commercial property owners in trouble and in desperate need of a better platform to showcase their offering.
Therefore, according to Colombo Office Space Director Ray Smith, they developed a site that could cater to this need.
“We provide more than the walls and infrastructure you need in your office space. Our purpose is to help you discover the best commercial space while enabling property owners to reach a clientele for their property in Sri Lanka,” said Smith in an interview with The Sunday Morning Business.
He explained that he came up with the idea after having worked in the commercial real estate industry for almost 15 years and seen this gap in the local market. This gap, along with the site's former hands-on experience in the commercial real estate landscape, aims to establish them as the best entity for organisations and professionals to find the right property.
“Our explicit as well as longstanding experience and relationships with real estate stakeholders in Sri Lanka give us access to the finest commercial properties in the country, and it's free advertising for the property owners.”
As a broker himself, Smith developed the website in order to list down the properties he handled and then extended this to other property owners. He stated they are currently targeting organisations of all sizes when it comes to their tenant, from start-ups to some of the biggest corporates.
The website’s approach, transactions, relationships, and dealings are ethical and lawful, he said, positioning Colombo Office Spaces as one of the most credible and reliable real estate partners in the country.
“We work with some of the biggest commercial property owners in Sri Lanka, such as Access towers, Aitken Spence, and Astoria. We help companies find the perfect office space for them by connecting them with these owners, and help the owners better promote their properties.”
Smith expanded on the website’s ethics and transparency, stating that once a company likes a property, they are directly connected with the property owner and quoted the exact price the owner is asking for with no mark-ups. After this, Colombo Office Spaces sets up a meeting between the owner and soon-to-be tenant in a boardroom where they get to negotiate on the price.
They also give all the information about the property to the tenants, both the pros and cons. According to Smith, they try and give these companies a space where they can grow and flourish, rather than being solely focused on closing a transaction.
“We believe companies do not stay stagnant and are always growing. This is especially the case with industries like IT where the companies expand at a really fast rate; so eventually, when they need a new office space, they will reach out to us again.”
While having A-grade commercial properties like Shangri-La on the site, he went on to explain that they give priority to all the properties equally, the reason being that they are not driven by numbers. They treat every inquiry as a prospective transaction, whether the deal is for Rs. 100,000 or Rs. 1 million.
“We operate with a mindset to add value to our clients’ businesses by browsing a premium property that satisfies their needs. Our core focus is on addressing the real estate/property needs of our clients, secondarily earning profits, which reinforces our efforts in a “customer first” practice. We have an extensive bouquet of property listings in our portfolio which acts as a repository of real estate options that will swiftly and undoubtedly resolve your real estate need.”
Currently, the site has over 100 listings on it, with more being processed each day. In total, the site holds around 300 to 400 office spaces in both the Colombo and Gampaha Districts. Smith stated that this was due to them still being a small organisation with a limited physical presence.
However, he stated that commercial property owners from around Sri Lanka can freely advertise their properties on their website, and it will connect potential tenants with the owners, leaving them to co-ordinate things moving forward.
The site also promotes co-working spaces, both local (such as WORX) and international (such as Regus).
Smith stated that the site makes its revenue by charging the property owners once the transaction goes through. He explained that they mostly make revenue from the rental segment, where they charge a commission based on the market standard of Sri Lanka’s rental segment, which is a month’s rent for a one year lease; this is also their minimum requirement for commercial properties excluding co-working spaces.
They charge 10% from the co-working spaces which are usually rented for two to six months, with most renting the space for at least a year.
The site also gets a small revenue from its paid promotions, which allows property owners to promote their advertisements to be more prominent on the website, and also get them shared on social media sites like Facebook and Instagram.
Colombo Office Space, however, takes local commercial real estate a step further by also giving a platform for business owners to sell their businesses. Smith explained that he has witnessed many lucrative businesses having to wind up due to the founders migrating. Seeing this as a waste, he stated he introduced this as an option for businesses, so the owners can make some money and the business can continue.
Speaking about the site’s experience with the Covid-19 pandemic, he stated that out of three office space segments, the A-grade commercial properties, like the World Trade Centre (WTC) and Shangri-La, seem to be suffering due to their rents being high and them being occupied by international organisations. However, following the first lockdown which ended in May, the interest in C-grade buildings have been on the rise, with the owners also being far more flexible when it comes to prices, he explained.
“We are getting inquiries on these properties even now, but people are worried with the current unstable environment. If they rent out a property and there are new travel restrictions or curfews, people will anyway have to work from home.”
Smith also claimed they have had inquiries from international clients, including US-based companies, for smaller office spaces ranging from around 3,000 sq. ft. to 4,000 sq. ft. Due to these positive inquiries, he stated the market here is recovering slowly.
As for Colombo Office Space’s future plans, Smith stated that apart from increasing the number of listings on the site, he also wants to expand their physical presence to cover all of Sri Lanka and move into more business-oriented districts like Hambantota. He also showed interest in entering the tourism industry where the site can promote small hotels, guest houses, and villas in tourist hotspots like Galle and Unawatuna.
“What we also want to focus on is promoting Sri Lanka as a business investment destination for international markets; once Port City Colombo completes development, we are expecting to see many international organisations entering the country.”