What is Central Business District?

The term Central Business District (CBD) is a widely used term in commercial real estate and is defined as the functional area of a city that has the maximum concentration of commercial, retail and business centres. Geographically, it coincides with the city centre and is the focal point for transportation networks of the city. It has maximum urban density than other districts of the town and offers a healthy environment for carrying out various commercial activities.

In ancient times, CBDs were the market squares where merchants and customers gathered to sell and buy things. However, as cities evolved, land scarcity and increasing demand reduced horizontal expansions and gave way to vertical developments.

Today, CBDs are a diverse region in metro cities that not only include retail spaces, commercial, offices, financial institutions, government centres and medical centres, but also entertainment hubs, restaurants, hotels and residential areas. This gentrification has given a new lease of life to CBDs.

Some examples of CBDs in India are:

• CBD Belapur, Navi Mumbai
• Connaught Place, New Delhi
• Netaji Subhas Road, Kolkata
• Poonamallee High Road and Armenian Street, Chennai

Another important characteristic of CBDs is smooth accessibility. Being a city centre, it is well-linked to all areas of the city including those in the far-flung zones too.

CBDs offer best infrastructure set-up required for a conducive business environment such as multi-storey buildings, quality workspaces, smooth connectivity, adequate water and electricity supply, and parking facility. Therefore, average per square feet rate in CBD is higher than other commercial centres in the city.  For instance, average property rates in Connaught Place vary between Rs 25,000 and Rs 50,000 per sq ft, which is much higher than areas such as Old Chanakyapuri and Chandni Chowk. Besides, property prices in CBDs have been continually on rise in the last few years owing to demand-supply disequilibrium.

On the whole, it is essential to understand the nomenclature of CBDs as it can be helpful if you are a commercial investor looking for potential opportunities to add to your portfolio, or planning to shift your business to a prime area of the city.