Around 2 million sft of office space was added in Chennai and Bangalore during the second quarter of 2008. The demand was primarily driven by IT, telecom and financial sectors in Chennai and biotechnology and textiles industries in Bangalore.

A study titled ‘Property Market Overview’ by Colliers International, a Canada-based real estate research and consulting firm, said in Chennai, Sholinganallur emerged as the new hub for IT parks and was a major supply generator during the second quarter.

Even though the supply situation during the quarter in the commercial segment improved, there was limited supply in the non-IT office space sector, which created sustained demand in this segment.

On the contrary, demand for IT space showed a marginal downward sign due to consistent supply in other areas like Guindy and Ambattur.

Rentals in Grade A office space in prime locations such as the central business district (CBD) and MRC Nagar were in the range of Rs 80 to Rs 85 per sft a month. In other areas such as Guindy, Adyar and Egmore, this was around Rs 60 an sft while in Ambattur and Taramani the average rental stood at around Rs 38 an sft.

In Bangalore, over one million sft of Grade A office space was added. The maximum space was supplied by EPIP zone/ Whitefield areas, while the rest came from Outer Ring Road (ORR) and other areas.

The study added that the demand for commercial space in north Bangalore increased after the commencement of the new international airport and persistent infrastructural enrichment in this area.

The old Airport Road saw a slowdown in demand since some of the companies were shifted to other areas closer to the new market.

Areas around the new airport witnessed marginal appreciation due to high demand for commercial space. The average rental for Grade A office space in CBD remained highest at around Rs 85 per sft a month. In Bennerghatta and on the Outer Ring Road rentals were in the range of Rs 45 to Rs 50 per sft.

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