Commercial space growing steadily

Construction of commercial office space is going on at a hectic pace in the city. In the first quarter of 2005, 2.06 million sq feet was under various stages of construction and they will be ready for possession by the second quarter.

The current year is likely to see far more absorption of commercial real estate space than that seen last year, at 7.25 million sq feet.

There has been a major thrust in the suburban and peripheral areas where about 1.8 million sq feet of space is under construction. In comparison, only 1.45 lakh sq feet is under construction in the central business district (CBD).

The non-CBD area which falls between the CBD and the suburban areas is losing charm, with only 1.15 lakh sq feet of construction underway.

The huge supply of office space has not impacted the market much. Capital values have grown tremendously in commercial as well as residential space.

Rental values, on the other hand are only gradually moving up in some parts of the city, says CB Richard Ellis in its first quarter property snapshot.

First quarter's prominent transactions in the CBD were Air Deccan leasing 22,000 sq feet on Cunningham Road, Crane Software leasing 20,000 sq feet on M G Road, Arcot leasing 13,000 sq feet on Richmond Road and Ernst & Young leasing 12,000 sq feet in Langford Town.

In the non-CBD area, notable transactions include Aztec leasing 60,000 sq feet on the Inner Ring Road, AOL leasing 20,000 sq feet on Airport Road and Airtel leasing 40,000 sq feet on the Inner Ring Road.

In the suburban and peripheral areas, the notable transactions include: Aries Global leasing 50,000 sq feet in J P Nagar, IBM leasing 60,000 sq feet in Koramangala and 1.6 lakh sq feet in Whitefield, Flextronics taking up 22,000 sq feet in Whitefield, Hughes Software taking up 24,000 sq feet, Cable & Wireless leasing 20,000 sq feet on the Sarjapur Ring Road, Sonao Networks taking up 23,000 sq feet, ICICI OneSource leasing 80,000 sq feet on Sarjapur Ring Road and Honeywell leasing 35,000 sq feet on Bannerghatta Road.

"Once again, Bangalore is leading the IT/ITES industry space take-up in the country. The influx of new companies that are setting up operations and existing companies expanding are the prime factors for the trend," said Ram T Chandnani, head south India operations, CB Richard Ellis.