Across Indian office markets, secondary business districts (SBDs) are not only the younger cousins of the central business districts (CBDs) but also emerging as the new favourites due to the more modern buildings that suit requirements of corporates and office buildings that can be upgraded into superior grade-A assets.
A look at different office markets shows how striking is the average age of a city’s SBD vis-à-vis its CBD. For e.g., in the case of Mumbai, the age difference between SBD-Bandra Kurla Complex (also called the de-facto CBD) and the original CBD of Nariman Point and Fort area is a staggering 28 years. No wonder the CBD has shown decline in rents in recent years compared to all other micro-markets in Mumbai and corporates have shown consistent preference for the SBDs, especially BKC.
Similarly, the difference between Delhi’s CBD vis-à-vis it’s SBD (Gurgaon Prime) is more than 12 years, which is considerable. Gurgaon is the preferred destination for corporates and MNCs whereas the CBD (Connaught Place) is preferred mostly by Indian firms and those having to liaison more with the government. Some of the more well-known names in Delhi’s CBD are expected to move to AeroCity.
In Pune, the difference (of seven years) is still higher than that in other tier-I, II cities. While Mumbai and Delhi have been the traditional favourites of most Indian companies and MNCs – at least as far as setting up their Indian head offices is concerned, Bengaluru too, has emerged as an IT and entrepreneurial hub in recent decades. Interestingly, the age gap between CBDs and SBDs in IT hubs is lower compared to Mumbai and Delhi.
Other cities, which saw more office space come up, especially in the last 12-15 years are younger markets overall, which explains the lower age gap between their business districts. In some of these cities, especially Bengaluru, the CBD still has many pull factors unlike Mumbai and Delhi’s CBDs. The age gap in Bengaluru’s case is only five years as both the CBD and SBD started seeing developments around the same time. Like Bengaluru, Hyderabad too has an age gap of five years only between its business districts but the average age of its CBD (at 20 years) is five years younger than Bengaluru’s CBD.
Ramesh Nair is the CEO and Country Head at JLL India