SBDs out­shine CBDs across most key of­fice mar­kets

Hindustan Times (Chandigarh) - Estates - - ESTATES - The au­thor is CEO and coun­try head, JLL In­dia Ramesh Nair ht­spe­cial­pro­ n

Across most key In­dian of­fice mar­kets, sec­ondary busi­ness dis­tricts (SBDs) are emerg­ing as the new favourites of oc­cu­piers due to the avail­abil­ity of larger floor plates and lat­est ameni­ties that suit most oc­cu­piers’ re­quire­ments be­sides of­fer­ing op­tions in su­pe­rior grade-A as­sets to the dis­cern­ing oc­cu­pier. In the more tra­di­tional mar­kets such as Mum­bai and Delhi, the SB D shave been see­ing more oc­cu­piers move in, at the cost of their CBDs.

Cen­tral busi­ness dis­tricts (CBDs) are largely los­ing out to the SBDs due to lack of project-and precinct-level in­fra­struc­ture and hardly any new grade-A sup­ply.

A look at the sup­ply that is sup­posed to come in from 2016 to 2020 in th­ese CBDs shows neg­li­gi­ble sup­ply in Mum­bai, Delhi-NCR and Chennai; and very less sup­ply in Hyderabad and Kolkata. Pune’s sup­ply pipe­line shows slightly lesser than 0.5 mn sft new of­fice stock.

Only Bengaluru ex­pects a sup­ply of ~2 mn sq ft in its CBD. The ‘most dy­namic’ city glob­ally also stands out when it comes to its CBD’s rel­e­vance thanks to its grade-A stock. Even to­day, Bengaluru’s CBD sees many trans­ac­tions and con­tin­ues to re­main at­trac­tive for oc­cu­piers. Oc­cu­piers in the city pre­fer to take up large floor plates in the CBD and larger ones in the SBD. This is re­vealed af­ter look­ing at the av­er­age floor plate sizes of the city’s CBD (where the av­er­age floor plate size is ~15,000 sq ft) and SBD (where the av­er­age floor plate size is ~22,000 sq ft).

A com­par­i­son of the dif­fer­ence be­tween av­er­age floor plate sizes across CBDs and SBDs of key In­dian cities re­veals that Bengaluru has the stark­est dif­fer­ence of all. The dif­fer­ence be­tween its two av­er­ages is 35,000 sq ft.

The dif­fer­ence in Delhi-NCR’s case is 17,000 sq ft – less than half of Bengaluru’s but still sig­nifi- cant enough – and demon­strates the avail­abil­ity of some very large floor plate op­tions in its SBD. Pune fol­lows with a dif­fer­en­tial of 14,000 sq ft. Mum­bai comes next at 10,000 sq ft and is fol­lowed by Chennai at 7,000 sq ft and Kolkata at 4,000 sq ft.

Hyderabad too stands out as there is no variance in the av­er­age floor plate sizes in both its CBD and SBD. As of­fice prop­er­ties in both th­ese dis­tricts have been made on smaller land parcels, there is a lesser num­ber of grade-A as­sets too. This keeps the cor­po­rate oc­cu­piers away. Also, as both are lo­cated in older ar­eas of the city with in­fra­struc­ture lim­i­ta­tions, nei­ther the CBD nor the SBD are the core of­fice dis­tricts. Cor­po­rates pre­fer HITEC City and Gachi­bowli ar­eas. The CBD and SBD here are mostly cho­sen by ar­chi­tec­ture and law firms, sim­i­lar to what is seen in Mum­bai’s CBD.

What bodes well for the fu­ture of th­ese SBDs is that their grade-Au­ni­ver­seis­set to ex­pand what with real es­tate in­vest­ment trusts (REITs) about to launch in the coun­try.

De­vel­op­ers and funds that own many as­sets across In­dia are ex­pected to re­fur­bish/ up­grade cer­tain build­ings in their port­fo­lio into grade-A or su­pe­rior grade-A as­sets. With th­ese de­vel­op­ments and most pe­riph­ery busi­ness dis­tricts still hav­ing con­nec­tiv­ity is­sues, most of th­ese SBDs will stand to ben­e­fit in the years to come.


Sec­ondary busi­ness dis­tricts such as Gore­gaon (above) and And­heri are known to ab­sorb of­fice spa­ces faster.

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