Highest Proportions of Company Relocations are in Bangalore

It is noticed that the relocation and consolidation of companies to sub-urban locations is on the rise. In the first half (H1) of 2013, the complete relocations across the top eight cities was at 5.6 million sq. ft. This was 2.5 times higher than the period of last year. It is also one-third of the total leasing movement, according to a renowned real estate consultant.

According to an official from a renowned executive director, the markets have witnessed a large number of corporates relocating and consolidating their operations inside a city to places that have quality construction with scalability options which were available at rentals as lower as 15 to 30 per cent. The top eight cities have seen relocations from IT/ITeS to peripheral locations.

It is noticed that during H1 2013, when compared to the same period previous year, Bangalore had recorded the highest percentage of relocations with slight increase of more than three times. There were many companies which relocated from CBD/ off-CBD locations like Millers Road, MG Road, Residency Road to Vittal Mallaya Road to peripheral regions such as the Outer Ring Road.

The situation was more or less similar in National Capital Region. Herein, office occupiers chose to relocate from prime locations in Delhi to Gurgaon with the rental differentials in the range of 20-30 per cent. This translated to cost advantage to occupiers. In Hyderabad, relocations were spotted from CBD/off-CBD locations like Banjara Hills Road, Somajiguda, Begumpet etc. This related to the non-availability of Grade A space to suburban places Gachibowli and Madhapur with much low rentals by approximately 10-11 per cent.

If we were to come to the city of Mumbai, there too relocations had increased substantially in the first half of 2013 when compared to the same period during 2012. The companies relocated from CBD locations to locations such as BKC and Andheri East at rentals lower by approximately 55-65 per cent.

Chennai too witnessed a rise in relocations in H 1 2013 as compared to the same period last year. The relocations provided quality spaces with more opportunities for scalability at rentals lower by around 20-30 per cent than prime places within the city.

The relocations scenario was more or less similar to other cities such as Pune, Kolkata and Ahmedabad. However, Ahmedabad recorded a low rate in relocations during the first half of 2013. This was due to the fact that the preference was mostly given to buy office space instead of leasing within the city by end users.