Anuj Puri, country head, JLL, told dna, "IT companies like Wipro, Cognizant and Accenture are demanding large IT parks and projects in peripheral business districts (PBDs) precincts and that is why, the developers are executing it by developing PBDs as new commercial hubs."
Mumbai's business hubs have undergone another round of change. As the city spreads wider, Navi Mumbai, Thane and Panvel have now emerged as favourable office locations for many multinationals and IT companies. Several other suburbs in Mumbai such as Vikhroli, Malad, Mulund and Goregaon have also set up large office spaces and turned themselves to secondary business districts (SBDs).
Anuj Puri, country head, JLL, told dna, "IT companies like Wipro, Cognizant and Accenture are demanding large IT parks and projects in peripheral business districts (PBDs) precincts and that is why, the developers are executing it by developing PBDs as new commercial hubs."
Rents charged at PBDs such as Navi Mumbai -- Rs 40-70 per square foot are much lower than the rates available at Lower Parel (Rs 150-175) or at Bandra-Kurla Complex (Rs 140-200), which are part of central business districts (CBD).
Subsequently, SBDs like Goregoan and Malad are other options with rents at less than Rs 70 per square foot.
According to a report released by industry body Confederation of Indian Industry (CII) and the international property consultant Jones Lang LaSalle India, peripheral area across the country have seen the biggest jump of 47% in first half of 2015, against 28% in 2004, said the report. The share of SBDs in stock has remained stable over the last several years at around 43% of the total stock.
"The trend that started two years back has now gained momentum as most companies are cost-conscious and they find prices attractive in these places," Pankaj Kapoor, MD of Laises Foras, a realty research firm told dna.
However, the CBDs, on the other hand, have witnessed a severe attrition of occupiers and a decline in fresh supply of space that has led to a drop in its share of stock from about 33% in 2004 to 10% in first half of 2015.
According to the real estate experts, 'cost arbitrage' and 'workforce' are the two main reason of bulk migration.
"Companies migrating to in suburbs and peripheral areas are driven by a combination of cheaper rents and lesser commute times for workforce. The suburbs are growing and most of the workforce comes from there," said Anuj Puri.
Another major advantage of these new buildings are, unlike those in Nariman Point, these are huge commercial centres with modern amenities.
"These are plush offices where all the facilities and amenities are provided within the complex," said Pankaj Kapoor.
Subsequently, Delhi-NCR has also witnessed the most spectacular emergence of alternate business districts in Gurgaon and Noida, which draw workforce not only from within local municipal limits but also from Delhi and other areas of NCR.
The trend has been especially pronounced in case of Gurgaon, which has seen an unprecedented urban transformation. Both Gurgaon and Noida comprised over 80% of the lease volumes in 2015 – amongst the highest proportion of lease volumes registered by peripheral destinations in any city, said the report.
The report also highlighted Pune and Chennai markets, which have also shown greater interest in the SBD locations.
For instance, Old Mahabalipuram Road (OMR) in Chennai and Hinjewadi in Pune emerged as front-running destinations in the respective cities. Kolkata has also seen a rising interest in PBD precincts such as Rajarhat, which has witnessed a rise in stock, driven primarily by the IT/ITES sector.
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