Move Over Central Business Districts
8.9 million sq feet of new office space likely in Delhi’s SBDs by 2020
Photo Credit : Bloomberg
Connaught Place in the capital, Nariman Point in Mumbai, B.B.D. Bagh in Kolkata and Cyber City in Gurugram are some examples of Central Business Districts or CBDs — well-connected locations with ample real estate and maintenance for offices that make good corporate addresses.
Now lack of additional capacity, clogging connectivity and growing clutter, is forcing multinationals and other large corporates to shift to Secondary Business Districts (SBDs) in the metros of Mumbai, Delhi, Kolkata and Chennai. “SBDs are emerging as the new favourites of occupiers across most key Indian office markets due to the availability of larger floor plates and infrastructure that suit their requirements, besides offering them options in superior Grade-A assets with better amenities,” says Ramesh Nair, CEO and country head, JLL India.
Reports say several large corporates in Mumbai have in the recent past, moved out of the CBDs to other parts of the city. Bank of America, for instance, has recently moved from Mumbai’s CBD to the Bandra-Kurla Complex SBD, pharmaceuticals major, Merck India moved its head office to Vikhroli from Worli, Volkswagen and DHL shifted their head offices to Andheri from Bandra and Johnson & Johnson relocated to Jogeshwari from Tardeo.
Similarly in Delhi, Bank of Tokyo and Philip Morris have moved from New Delhi’s CBD to the SBD. Worldmark in New Delhi’s Aerocity is one such SBD, which is getting preference over Gurugram. Explains Nair, “CBDs are largely losing out to SBDs due to lack of project-and precinct-level infrastructure and hardly any new grade-A supply. What bodes well for the future of these SBDs is that their grade-A universe is set to expand with real estate investment trusts (REITs) that are about to be launched in the country.”
Mumbai, Delhi, Kolkata and Chennai are expected to see a negligible supply of fresh office stocks till 2020 as major projects being planned in these cities are in the secondary or upcoming business centres. As per JLL’s analysis, around 8.3 million square feet of fresh office stocks are likely in Mumbai’s SBD, while similar centres in Delhi and Pune may add another 8.9 million square feet and 13.5 million square feet of fresh office stock by 2020.
Two large cities — Bengaluru and Pune — are bucking the trend. Nair says Bengaluru expects supply of two million square feet of more space in its CBD. Even today, Bengaluru’s CBD sees many transactions and continues to remain attractive to occupiers. Nair reckons that the supply that is supposed to come in from 2016 to 2020 in these CBDs, shows a negligible addition in Mumbai, the Delhi-NCR and Chennai.