Why the Right Office Space Is a Competitive Advantage for SMEs

Hiren Chheda, Founder & Managing Director of Ekatva Group and Chairman, Commercial Development, MCHI Thane, underscores that selecting the right office space can shape an SME’s growth as decisively as product innovation or market strategy. He notes that factors such as location, cost structure, and the surrounding business ecosystem influence credibility, talent attraction, and long-term value creation. Emerging hubs with strong infrastructure and room for expansion—such as Thane and other suburban business districts—demonstrate how strategic real estate decisions can turn office premises from a fixed expense into a lasting competitive advantage.

For a budding or established SME, an office space offers more than just an address to bookend the business – it is a cornerstone, lending credibility and the opportunity to foster an inspiring work environment. However, choosing the right office space becomes paramount especially in the case of SMEs, who must budget carefully to prevent overruns – while typical rental expenses range from 5-15 per cent of a company’s overall operating budget, factors such as the industry, business model and the company stage make this decision very subjective. The following parameters will enable SMEs to determine how to select an office space that doesn’t eat into their finances, while contributing tangible business outcomes.

Emerging over established

In a city where real estate comes at a premium, the right location can not only yield cost savings but also make a significant impact on employees’ mindset and productivity levels. While established business hubs such as Lower Parel and BKC can prove prohibitively expensive, upcoming locations such as Andheri East, Powai, Thane and Vikhroli can offer a far more competitive cost-to-benefits ratio. Thane is emerging as a hotspot for SMEs with 161,357 enterprises registered in the district as of June 2025, as per figures from the Udyam portal. An obvious and direct correlation that can be drawn is the difference in potential capital appreciation – as of Q1 2025, BKC’s commercial office spaces are priced at an average of ₹45,000 per square foot while Thane’s offices are more conservatively priced between ₹11,000 and ₹13,000 per square foot. As the area continues to develop, the lower cost of acquisition will translate into a higher potential for capital appreciation.

Ease of expansion

With marquee commercial hotspots in Mumbai rapidly approaching saturation, companies are migrating to suburban business hubs such as Thane and Navi Mumbai, which are backed by excellent infrastructure, better planning and potential for further business expansion. These locations are largely considered as startup-friendly destinations, particularly for the IT, fintech, and logistics sectors. Growing businesses prioritise the availability of affordable office spaces, business parks and SEZs in these areas. Thane, for example, is projected to add 3.5 million sq. ft. of Grade A office space by the end of 2025, which will significantly increase its commercial footprint. For SMEs this becomes a great avenue to set up shop, as potential needs for larger office spaces can be easily fulfilled. Compare this to hubs like Andheri, BKC, Lower Parel where the struggle to increase office space is getting more challenging, due to limited new inventory additions and legacy businesses that have set up shop for decades.

Exceptional connectivity

For SMEs, there are two problems with hiring talent – the organization’s perceived brand value and office location where employees will come to work. While the former is in itself a journey to build a better employer brand, the latter is much more in control for SMEs to optimize. Take Wagle Estate, Thane city’s upcoming commercial district for example. With great connectivity from both Thane and Mulund railway stations, and enhance road connectivity via LBS Road and Eastern Express Highway, organizations have had no need to think twice when setting up office operations here. Additionally, with the upcoming Thane ring metro and Metro Line 4 of the MMRCL, connectivity for residents within the city and to other neighbouring suburbs will be enhanced. When organizations choose to set up their offices keeping future infrastructure upgrades in mind, they set the correct track to long term expansion and value appreciation for themselves. A quick employee demographic analysis of your organization will help you to better address employee’s travel routes and thereby help identify the right office location for you.

A productive mindset

It is imperative for commercial spaces to be complemented by high quality residential properties, open spaces and robust social infrastructure, all of which contribute to a better quality of life for employees residing in the area and can improve their motivation and productivity levels. In Thane where we have delivered over a million sqft of commercial spaces, I see this sentence play out every day. Businesses need three things to flourish – residential pockets where potential customers live, social infrastructure where customers from further away can be pulled, and other businesses that increase the likelihood of potential customers to engage with some organizations in the larger network. In Wagle Estate alone, there are currently more than 2000 small, medium and large enterprises with offices, catering to all kinds of industries and sectors. For SMEs, having an ecosystem helps in many ways. Professionals needed to hire for consulting, audit and other services already operate around you. Potential B2B customers are within arm’s length of you. Acquiring new customers by building partnerships and reaching for references becomes much easier. While in pockets like BKC, either you have to be too large or too niche to make a space for yourself. After all, what is better for your productivity? Seeing a large MNC do 20% more revenue in a year or seeing your neighbouring office owner increase their sales by 20%?

Acquiring a good office space should be an especially careful consideration for SMEs. While cost optimisation is key, understanding one’s business’s needs and potential for expansion, while taking into account practical considerations such as employee wellbeing can enable businesses to convert their offices into assets.