Large tenants desert city centre

Large tenants have vacated their premises in central business districts (CBD) of Bangalore owing to traffic chaos on major roads due to the work on the Metro Rail project.

"During the fourth quarter of 2007, the CBD saw an infusion of grade 'A' space of around 250,000 square feet into the market due to the vacation of premises. Large tenants or companies moved to non-CBD locations or extended business districts (EBD) like Koramangala and Indiranagar," said international real estate consulting firm CB Richard Ellis in its report 'Market View - India Office'.

Despite movement of large companies, the CBD continues to maintain its preferred status for new companies and start-ups as their prime office search area, report added.

Some of the major transactions in CBD locations in Q4 of 2007 were: Citrix - 80,000 square feet, Professional Access - 54,000 square feet, Sungard - 27,000 square feet, CBRE - 8,500 square feet, Kingfisher - 25,000 square feet, Quintiles -25,500 square feet, AMD - 54,000 square feet and ThoughtWorks -52,000 square feet.

"The non-CBD locations are considered by companies as a viable alternative to the CBD due to the development of quality office space and less traffic congestion. These locations have been helped by the two major residential pockets of Indiranagar and Koramangala as well," said Ram Chandnani, Head-Southern Region, South Asia, CB Richard Ellis.

The recent trend observed is that individual developers construct quality office spaces in this zone which mostly range from 10,000 square feet to 30,000 square feet. These are good options for companies looking for small spaces near the centre of the city.

A rider though is that most of these buildings have retail spaces on the ground floor and may therefore seem unfit for occupation by some companies, he added.

As for the supply in non-CBD locations, there are two major projects planned for 2008. The expected supply in this micromarket for next year is around 900,000 square feet of STPI space and around 250,000 square feet of SEZ space.

Major transactions in non-CBD locations are Ernst and Young - 36,270 square feet, Amway - about 20,000 square feet, BCD travel - 18,500 square feet, MindTree - 18,000 square feet and Standard Chartered Bank - 65,000 square feet.