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Bengaluru, which is driving office space absorption in the country, is likely to see around 14 million square feet (1.3 million square metres) absorption year-on-year (YoY) for the next three years.
Belying speculation about competition from Hyderabad, and the rising concerns of automation and its impact on the office space market, Bengaluru maintained its Silicon Valley status and recorded the highest absorption of 15.3 million square feet (1.4 million square metres) in 2017, Ritesh Sachdev, Senior Executive Director, Occupier Services, Colliers International India, said.
‘Robust market’“With all these developments, we anticipate the office market to remain robust in the next three years,” he added.
Bengaluru has seen a significant increase of 20 per cent from 2016, when the city had witnessed a gross absorption of 12.8 million square feet (1.18 million square metres).
Sachdev attributed the increase in absorption primarily to the expansion by technology occupiers, contributing 56 per cent of the total demand. Banking, financial services; insurance (BFSI) and engineering; manufacturing followed with 11 per cent and 9 per cent share, respectively.
Rental increaseOn the rental side, Sachdev said the city recorded an average rental increase of 13.7 per cent YoY in 2017, highest in India. “While sizeable supply is under construction, we cannot rule out about 8-10 per cent YoY increase in Grade A rents due to high demand in preferred micromarkets,” he added.
Talking about office space inventory, Sachdev, quoting the Colliers Research, said that “New supply of 12.7 million square feet (1.1 million square meters) got added to the city’s inventory in 2017, recording a 30 per cent increase from 2016.”
About 26 million square feet (2.4 million square metres) of Grade A office space is scheduled for completion in Bengaluru by 2020. More than 60 per cent of the total upcoming space is concentrated in ORR and Whitefield, while the rest is distributed across micromarkets such as north (10 per cent) and SBD (7 per cent). The upcoming supply is expected to complement the increased demand in ORR, Whitefield and emerging micromarket of North Bengaluru.
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