City centres losing out to suburbs due to lack of projects, amenities

Secondary business districts (suburbs) are outshining central business districts (city centres) across major cities. In Mumbai, Delhi NCR, Pune, Hyderabad, Chennai, Bengaluru and Kolkata, SBDs are offering large spaces and latest amenities that suit most occupiers’ requirements.

Central business districts (CBDs) are largely losing out to the SBDs due to lack of project and precinct-level infrastructure and hardly any new grade-A supply, said Ramesh Nair, CEO & Country Head, JLL India.

“A look at the supply that is supposed to come in from 2016 to 2020 in these CBDs shows negligible supply in Mumbai, Delhi-NCR and Chennai; and very less supply in Hyderabad and Kolkata. Pune’s supply pipeline shows slightly lesser than 0.5 million square feet new office stock,” he added.

Only Bengaluru expects a supply of around 2 million square feet in its CBD. The city also stands out thanks to its grade-A stock.

“Bengaluru’s CBD remains attractive to occupiers. Occupiers in the city prefer to take up large floor plates in the CBD and larger ones in the SBD. This is revealed after looking at the average floor plate sizes of the city’s CBD (where the average floor plate size is around 15,000 sq ft) and SBD (where the average floor plate size is around 22,000 sq ft),” said Nair. As per JLL study, a comparison of the difference between average floor plate sizes across CBDs and SBDs of the key Indian cities reveals that Bengaluru has the starkest difference of all. The difference between its two averages is 35,000 sq ft.

The difference in Delhi-NCR is 17,000 sq ft – less than half of Bengaluru’s but still significant enough – and demonstrates the availability of some very large floor plate options in its SBD. Pune follows with a differential of 14,000 sq ft. Mumbai comes next at 10,000 sq ft and is followed by Chennai at 7,000 sq ft and Kolkata at 4,000 sq ft.

Hyderabad too stands out as there is no variance in the average floor plate sizes in both its CBD and SBD.

As office properties in both these districts have been made on smaller land parcels, there is a lesser number of grade-A assets too.

This keeps the corporate occupiers away. Also, as both are located in older areas of the city with infrastructure limitations, neither the CBD nor the SBD are the core office districts. Corporates prefer HITEC City and Gachibowli areas.

The CBD and SBD here are mostly chosen by architecture and law firms, similar to what is seen in Mumbai’s CBD.