Infrastructure pushes office space demand in Bangalore
Aug 16, 2013
Source : The Times of India

 

BANGALORE: The micro-markets such as Whitefield, Electronic City, Bannerghatta Road and Old Madras Road may hold the key to supply of Grade A office spaces, but recently a new trend is emerging – that of leasing office spaces in the Central Business District (CBD), and Peripheral Business District (PBD) such as Jayanagar, Koramangala, Old Airport Road, Indiranagar, New BEL Road and J P Nagar.

“A location that is focused on the residential segment with low commercial and entertainment options is not likely to sustain for a long time. Similarly, a commercial hub with low or no residential development is likely to cause problems for the people working there who may seek residential districts in the vicinity which can reduce the commuting time to work, and therefore is not sustainable. In addition to the overall real estate development, infrastructure also plays a pivotal role in developing a location. Poor infrastructure or delayed infrastructural developments can eventually reduce the investment potential of a location,” says Ashutosh Limaye, Head – Research and REIS, Jones Lang LaSalle India.

Location and connectivity

The main demand drivers again remain location and accessibility. Hence, the M G Road and surrounding regions are once again in focus for office spaces due to the completion of the Metro on that stretch and the beautification of the M G Road Metro station.

According to a recent DTZ report, ‘the take-up of A-grade office space in the seven largest cities of India recorded a growth of 74 percent quarter-on-quarter (QoQ) for the April-June quarter. The main driver of this growth is Bangalore, where large transactions of one million sqft were completed’.

The main factors that attract companies to operate out of certain locations are the availability of parking, infrastructure projects such as good roads and transport in the vicinity, and facilities such as power and water. The core commercial districts of the city have always been a favourite for offices to be located. The construction of the Metro had for a while, hampered this growth. But now that it has been completed, areas such as Indiranagar, K R Puram and M G Road are back on the track of realty growth.

“Though all-round development requires considerable time, it lends maturity to the real estate market in the location while ensuring price growth is sustained over a longer time period. The submarkets offer good investment opportunities and property price appreciation is likely to vary depending on endemic factors associated with the particular submarkets and their precincts,” adds Ashutosh.

Sub-markets and growth

The sub-markets for commercial space growth are dependent totally on connectivity and good infrastructure coupled with residential catchments. The Outer Ring Road (ORR) has been instrumental in the growth of commercial realty along its belt. Stretches on Old Madras Road, Sarjapur Road, Marathahalli and near the international airport have opened up immense possibilities for realty growth.

Many of the companies located in these sub-markets also prefer to have an office space in a core city area. This is due to the good access and facilities available at both locations and also to allow employees who stay in other parts of the city to opt for a location of their choice.

Peripheral business district

Known as high street locations, the areas of Indiranagar, Koramangala and Jayanagar have now been transformed as zones of mixed development. These traditionally residential locations now sport retail and commercial facilities. Office spaces located in such areas have the advantage of access to quality housing as well as good social infrastructure.

These areas hold much more potential now when the Metro Rail will commence operations next year. The Metro Rail connectivity to Jayanagar, Yeshwanthpur and Kanakapura Road will increase the floor area ratio (FAR) and result in vertical growth in these residential localities.

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