Financial Daily from THE HINDU group of publications
Monday, Feb 03, 2003
Industry & Economy
Real Estate & Construction
Experts delineate quality office space
CHENNAI, Feb. 2
BUILDERS and property investors are taking a good look at what makes commercial space a hot-seller. The buzzword these days is `quality space' and it is something that property consultants and realtors are constantly harping on.
What, then, is quality real estate? This a question that is asked quite frequently these days, as increasingly, more companies, especially multinationals, turn their backs on the existing commercial space available in Chennai.
Realtors say that the first things that MNCs ask for is large floor plates which can be modified to suit their specific needs.
Mr Ramesh Nair, Senior Manager, Jones Lang LaSalle, said that what is required is centrally air-conditioned floor plates of more than 20,000 square feet with a ceiling height of at least 10.5 feet from beam bottom to floor. A majority of the built-up space in Chennai will not suit this criteria, as the floor spaces are demarcated into rooms, invariably, with low ceilings.
Mr John Kuruvilla, CEO and Managing Director, Propmart Technologies Ltd, a real estate company with a national presence, said that the inability of low quality supply to get absorbed is apparent in most cities. But this has not stopped investors in real estate from constructing new buildings.
According to Propmart's estimate in 2003, Bangalore will see an addition of around nine million square feet of office space, Chennai around 4.5 million square feet and Hyderabad around 3.5 million square feet of space.
Bangalore, Mr Kuruvilla said, scores over the other cities due to the availability of large floor plates and land banks in areas with good residential infrastructure. Moreover, he said, Bangalore's real estate was ready for the boom in BPO (business process outsourcing) and ITES (information technology enabled-services) and a lot of commercial supply was created.
Another trend evident in Bangalore and Hyderabad is that IT companies are going in for the "built to suit'' facilities. This has been driven by the availability of good land banks in these cities, Mr Kuruvilla said.
Optical fibre connectivity has also become a must in most buildings. Companies, especially MNCs, are not keen on high capital expenditure, Mr Nair said, and are on the lookout for buildings that have all the facilities they want.
Sources at CB Richard Ellis said that companies also look for 100 per cent power back-up to take care of the 24-hour air-conditioning, even in common areas also. If the buildings have a glass façade, as many of them do nowadays, it should be vacuum filled double glazed, they said.
Car parking is another major issue that companies are looking seriously at especially as it has become a major problem in Chennai. International property consultants agree that a good car-parking ratio would be one reserved car park per 800 to 1,000 square feet of space lease.
On these criteria, real estate industry sources say that most of the buildings at present available in Chennai fall short.
Many of the large buildings, especially along major roads like Anna Salai, R.K. Salai and NH Road do not have adequate parking facilities. Cars are often double parked on the road. But there seems to be a glimmer of hope as some companies like the Khivraj Group plan to offer modern car parking solutions off Anna Salai mainly to cater to their own showroom. Realtors said that more companies would get into the act (of providing multi-tier car park solutions) if some benefits accrue to those investing in these facilities.
Most MNCs have taken security issues seriously. Mr Nair said that the companies feel the critical need to protect employees and operations from attacks or calamities. Disaster recovery plans and procedures have assumed new importance. He said that internationally many companies have planned modifications to their overall corporate real estate strategies and have implemented significant security and safety measures in response to 9\11.
Some of the concerns of corporate tenants about high-rise locations and display of corporate logos on the building, which might attract a terrorist attack has subsided, he said. But there continues to be strong desires for excellent building security, disaster recovery plans and capabilities and to have data centres in decentralised locations.
Besides assess by public and private transport, companies look at additional facility offers like cafeteria, gyms and an ATM, realtors said.
Mr Nair said that the demand for decentralised operation has not yet materialised except for the largest of companies. In many cases, a number of companies are considering splitting operations into front and back office segments, with the back office portions going into a decentralised location this brings down occupancy cost and reduces the risk of a catastrophic event.
Mr Nair said that Chennai would benefit if, with the right kind of infrastructure, it can attract a chunk of this decentralised operations.
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