Availability of quality office space and talent pool, good connectivity and favourable zoning regulations have steadily built this micro-market into a premium locality
The 62-km Outer Ring Road (ORR) was primarily conceived to free up the narrow core city area roads from heavy inter-city vehicular traffic. The project took off in 1996 and was completed by 2002, connecting all the major highways around Bengaluru Tumkur Road, Bellary Road, Old Madras Road, Hosur Road, Bannerghatta Road, Kanakapura Road, Mysore Road and Magadi Road to facilitate this diversion.
However, in the process, it also paved the way for the opening of locations in the areas then considered to be the peripheries of the city. Corporates looking for large land parcels to set up their facilities at low rentals benefitted from the smooth connectivity. This ORR belt has now grown into one of the mostly densely-populated regions, with commercial real estate supported by residential and retail growth side by side.
Connectivity has been the strongest driver for the development of ORR as a micro-market in its own right. Trivita Roy, Associate Director Research and Real Estate Intelligence Service, JLL India, elaborates, “Good connectivity led to the setup of office space here. Developers gauged that by putting up office space here they could attract the workforce already residing in the belt. The presence of quality office space and talent pool led occupiers here. This led to further residential development, in turn resulting in a good amount of leasing.“
Unlocked due to the easy connectivity to the different regions across the city, the availability of land was supported by the rentals. This made the ORR a key market for occupiers.
Surabhi Arora, Senior Associate Director Research, Colliers International, elaborates on the price factor. “Even as late as 2009-10, rentals here averaged Rs 30 per sqft, making it an affordable office market for occupiers. However, increasing demand for office space resulting in low vacancy rates has led to a shoot-up in the rentals from around Rs 55 per sqft in 2013 to Rs 6065 per sqft now.“
FAVOURABLE ZONING REGULATIONS
The flashpoint for the ORR was the mutation corridor benefits that allowed mixed use growth and provided for additional floor area ratio (FAR).Surabhi explains, “The ORR can be divided into three stretches from the commercial real estate perspective from Hebbal to K R Puram, K R Puram to Marathahalli and from Marathahalli to Sarjapur Road. Currently, the epicentre is the seven km stretch from Marathahalli to Sarjapur Road which has about 40 million sqft of Grade-A office space with multi-tenanted IT parks. This particular stretch has benefitted mainly due to favourable zoning regulations classifying it as 'Industrial hi-tech', thereby granting it a higher FAR of 2-3.25.“
Factors such as availability of large land parcels, low rentals, proximity to the Central Business District (CBD), good Grade-A office supply, proximity to residential catchments and talent pool availability have all worked in favour of this belt of the ORR.
ACTIVE LEASING HUB
According to Colliers India Research, there is approximately 9-10 million sqft of commercial space under construction, set to come up over the next three years. The Marathahalli to Sarjapur Road belt is also an active leasing hub, leaving its mark on the national average too.
“While about 30 million sqft of office space was leased out in India last year, about seven million sqft was leased out in this stretch of the ORR,“ Surabhi says.
AVAILABILITY OF TALENT POOL
The concentration of corporates on the ORR has led to a proliferation of residential catchments around and availability of a huge talent pool. This has worked in favour of many other corporates looking at space here. “Access to a sizeable talent pool is the primary reason many corporates want to set up office here. Occupiers don't mind the rising rentals too due to this reason,“ Surabhi adds.