The Hindu Business Line : `Need for interim office space rising in Bangalore'

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`Need for interim office space rising in Bangalore'

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Shortage of ready supply and pre-leasing by corporates: Report

Due to continued demand for office space, business centre occupancy levels in the city are expected to remain over 75 per cent through 2007.

Bangalore April 5 A projected supply of 13 million sq.ft. of office space for the year notwithstanding, the shortage of ready supply and pre-leasing by corporates has increased the need for interim office space in Bangalore, says the latest report from real estate services firm Cushman & Wakefield.

High-interest areas such as the central business district (CBD) and Off CBD face this space crunch.

Some locations such as Outer Ring Road currently face a situation wherein business centre projects nearing completion have already been committed to by corporates, thereby creating a further dearth of supply, the report says. Yet, there are no operational business centres in the area that can cater to the current requirement, although certain clients are provided incubation space by developers. Whitefield, though facing surplus stock from the previous year, has also witnessed large pre-lease commitments.

According to the report, the average cost per seat in Grade-A business centres is between Rs 18,000 and Rs 30,000 per month in the city. Facilities such as telephone, fax, photocopying, Internet, pantry, conference rooms, help/travel desk and secretarial services come at an additional cost.

Fully-furnished incubation centres, temporary structure proximally located to the developing facility (about 15-20 per cent of the committed space), offered by developers, come at around Rs 65-75 per sq.ft. per month.

Due to continued demand for office space, business centre occupancy levels in the city are expected to remain over 75 per cent through 2007, the report says. The charges/rentals will remain stable over the next six months, it adds; the reasons, sustained demand and new business centres being available in CBD and other suburban and peripheral locations.

Serviced apartments

With the demand within the hospitality industry skyrocketing, serviced apartments have emerged a cost-effective alternative for business travellers and tourists, the report says. These serviced apartments are largely operated by apartment owners or builders. Usually, entire apartments (one, two or three-bedroom) or studio units or shared apartments are on offer.

Largely catering to corporates, business travellers, tourists, expatriates and families, the tariffs range between Rs 1,500 per day for a one-bedroom/studio and Rs 6,000 plus per day for a three-bedroom apartment. These serviced apartments are ideal for short stays.

According to the report, Bangalore currently has about 15 professionally-managed serviced apartments. Some of these offer facilities such as guest lounge, swimming pool, spa, restaurant, housekeeping, business centre and other clubhouse facilities. Occupancy levels are usually around 90 per cent, indicating the tremendous latent demand in the market, the report adds.

There is also a large unorganised market in the city, driven by mom-and-pop establishments, which, however, do not provide the facilities offered by the professionally-run ones. Their rates also vary depending on the duration of stay, location, services provided, ambience etc, the report says.

Unlike Mumbai, prominent hospitality brands have not yet entered the serviced apartment sector in Bangalore. International brands such as Oakwood and Ascott have plans to launch shortly. Several more centres are likely to come up in peripheral areas, the report adds.

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