Bangalores It Corridor Sealed For New Firms

Most of the sought-after destinations along Bangalore's information technology corridor have no ready prime office space to offer to infotech companies in the next six months.

According to top real estate agencies, the corridor which runs through Whitefield in the east to Electronic City in the west, is chock-o-block with software solution companies. Until new space is carved out, some of Bangalore's prized locations will be out of bounds for new IT companies.

According to primary research conducted by international real estate agency Cushman & Wakefield, a majority of the software resource pool resides in the surrounding areas of the corridor, mostly in Koramangala, Indiranagar, Jayanagar and J P Nagar, which are some of the large residential areas in the city.

 

"Our experience with IT corporates reveals that the distance of key residential areas is an important criterion in the location decision matrix adopted by these companies. IT firms seek to employ and retain high quality manpower. But distances from their residences exert an enormous `push or pull' effect on software professionals," says Cushman & Wakefield.

"In the last quarter, there has been a 10 per cent rise in lease and rental rates in these areas due to scarcity of space," Ram Chandani of Richard Ellis told Business Standard.

"Very soon new places have to be found. In fact some clients are looking at J P Nagar now. But for those who want to stay in Indiranagar, they will have to build their own facility. This, however, depends upon the time frame they have in mind. An infrastructure could take months to complete," Chandani said.

The government had promised to supplement the existing infrastructure to support activities of the IT companies (existing and forthcoming) in this corridor. But it has not yet frozen on the details, such as the areas of investment, size, timeframe, or source of capital.

This IT zone is a ribbon corridor which already has a number of IT companies, including the large facilities of Oracle, Infosys, and more recently, Axes Technologies. Several projects are proposed and are in various stages of development.

In 1994, the office lease rental for super-built area in Indiranagar was about Rs 16 per square feet and Rs 14 per sq ft in Koramangala. The rates showed a good increase in 1996 when they were quoted at Rs 38 per sq ft and Rs 24 per sq ft, respectively. This year, the rates are at Rs 36 per sq ft and Rs 22 per sq ft, a rise from 1998 when it fell to 30 per sq ft and 18 per sq ft, receptively.

Further, attractive residential options are available at affordable prices for those employees relocating to Bangalore from other parts of the country in a cosmopolitan environment. Sourcing and retaining quality IT professionals is key to the success and growth of IT companies, and hence the mooted IT corridor is preferred by default.

Other factors like availability of quality space options with less strained infrastructure at reasonable prices are also factored in while making decisions.

The IT corridor has not had any noticeable or material impact on the real estate market of the mooted corridor per se, since no concrete steps have been identified.

The announcement of timeframe and new infrastructure will catalyse the location of companies and raise real estate values.