A majority of the office space demand in the suburbs is driven by the 'IT' & ITES sector. But thanks to the economic situation globally, this demand seems to be falling now. In fact, not just IT, but the impact is also visible on demand coming from banking and financial sectors in these areas.

According to a report by JLLM, the demand for IT, banking and financial office space in the suburbs of cities like Delhi, Mumbai and Chennai is expected to fall by about 10-15% over the next two quarters. A similar dip is expected in the rentals too, during that period. Experts say, oversupply is another reason why rentals are heading south.  

Anuj Puri, Chairman & Country Head, Jones Lang LaSalle Meghraj, said, "There's a huge amount of supply in the suburban areas for office space, which is going to be hitting the market or is currently hitting the market, as a result of which, the supply is now in access of the demand in those suburban areas". He added, "Whether it is Navi Mumbai in Mumbai, or Whitefield in Bangalore, or Greater Noida in Delhi, the suburban areas to major cities are susceptible."

Currently office rentals in suburbs like Navi Mumbai and Gurgaon are between Rs 45 to Rs 130 a square feet per month. While Gurgaon absorbed approximately 3 million square feet of supply in 2007, about 9 million square feet is expected to hit the market by the end of this year. Similarly, suburban areas of Mumbai like Navi Mumbai, Thane and Powai will absorb over 6.5 million square feet.