SIGNIFICANT FACTORS- OFFICE SPACE

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Our Country’s commercial and social settling has been transformed by the presence of IT Sector in the Country.It is looked upon as a most profitable centre for multinational Companies (MNCs) to operate resulting which the prominence of the Real Estate Sector has grown immensely through the years, particularly in the commercial sector.

There has been a tremendous growth in commercial real estate and it has led to growth in a city or city location as retail, residential and hospitality projects and the same are designed around commercial areas across the country. Certain factors are of critical importance for the end user such as human resource availability, quality of the project, political stability, location, infrastructure of the city and operational costs.

It is not only difficult but complex for companies to select property as it depends on several things. Every Company keeps real estate as one of the key portfolio of its over all strategy as it belongs to the high cost category. Human resource planning, financial planning and operational factors are all interlinked with it.  The location and development that a Company propose as to have several plus points such as physical proximity to social infrastructure like housing, digital connectivity, energy factors and better design and services specifications.

The quality of the project decides the selection of the development. Quality consists of basic construction quality, design efficiencies, infrastructure like Power load and car parking, effective use of IT in running the project, savings in energy and the delivery of the project on schedule.  Redundancies in power and telecom are specially emphasized by these MNCs.

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The feasibility, suitability and acceptability of a Project are determined through exhaustive qualitative and quantitative analyses. A multitude of factors have to be objectively analyzed apart from only pricing. The soaring cost is one of the main hurdles faced by a developer who cannot handle sudden increases in cost and this leads to cost-cutting which affects the quality and delivery of the project.  The cost of construction ranges from between Rs.4,500 to Rs.5,000/- per Sq.ft., to Rs.6,000/- per Sq.ft. Timelines for completion vary according to the project. Availability of labour, plant and machinery besides various statutory approvals affect the project deliveries.

A Company which propose to expand or begin its operations will find that deciding upon the location itself is one of the key elements. As Central and suburban regions in Tier- 1 cities face lower supply, the marks in the peripheral regions have become more eminent. As the operational costs in Tier 2 and Tier – 3 cities is comparatively lower, they are also fast becoming alternate destinations for commercial activities.  

Regions in the periphery around 75 KMs from the centre of metros are more affordable in real estate options than the central or suburban ones. Testimonies to this shift can be seen in certain predominant areas in Bangalore, Hyderabad and in Chennai.  More than 75% of the total supply in Tier 1 and Tier 2 cities comes through the peripheral regions. The costs of land in these areas being much lower might be the obvious reason in comparison to sites closer to or in the heart/centrally located places in city. Expanding in the peripheral region has its own problems such as high costs of transportation, lack of suitable social infrastructure and unwillingness of employees.

MNCs usually prefer peripheral locations as they can bring together their facilities in the form of a campus and thereby make their own environment.  According to statistics peripheral areas have the most new developing projects such as residential townships, shopping malls and other kinds of social infrastructure.  One can witness in the coming years wherein multi-tenanted developments will take root in peripheral locations and if MNCs will be drawn to the infrastructure developments in these regions or whether the MNCs will itself turn to them for making their own excellent campuses.  Integrated townships that are scheduled to be set up in these locations, in Bangalore, Chennai, Gurgaon, Pune and Hyderabad are expected to influence the real estate market in marked manner in the near future. 

Cost benefit and availability of talent are some of the factors that are viewed when small cities are considered, as compared to peripheral locations.  Some of the cost benefits are lesser cost of real estate, lower cost of living, anchor tenant opportunities and hardly any transportation costs. Smaller cities have the advantage of possessing a fresh talent pool and this makes them good locations to expand and operate from. Government support is another important benefit.  Smaller cities are often given a fillip by concerned State Governments so hat pressure from metropolitan cities is eased where providing infrastructure is concerned, and they offer free land, fiscal rebates etc., as incentives to them.   Smaller cities also struggle with large scale issues in infrastructure like connectivity to main cities, entertainment areas, cultural problems, quality of transportation, roads and high quality infrastructure.

Corporate requirements have specifications that need more attention and the city selection is not the only part of the location selection. Sectors like marketing, banking etc., that are non-IT sectors usually give preference to city centers or suburbs from which to operate if permitted by the availability and costs. However, IT or IT related companies require a larger amount of space which limits them to peripheral or suburban locations.  A large part of Office development projects occupy space in IT parks. The relaxed floor space index and the speedy growth of the IT and IT related sectors serve to attract more number of real estate developers.

Because of the advantage of location possessed by IT parks in prime areas in a city they are still sought after as they save the cost of transporting employees and give a good working environment.  Small and medium sized companies usually prefer such places as they want to be located in a certain part of a city.  The flexible timelines to develop at the Company’s own pace are offered by campus developments.  As privately owned land has very high prices causing the need for a very large investment initially, setting up own campuses can be rather costly. MNCs usually opt for leasing space unless land is offered in Industrial parks promoted by the Government at subsidized rates.

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BMRDA Approved Layouts

Anekal
Bannerghatta Road
Devanahalli Road
Electronic City
Hosur Road
Indira Nagar
Kanakapura Road
Koramangala
Sarjapur Road
Vijayanagar
Whitefield