COMMERCIAL SPACE in DEMAND IN PBDs
Bangalore has always been an attractive destination for occupiers, but now, with its landlocked area, competitive rentals and infrastructure initiatives, the Peripheral Business Districts (PBDs) of Outer Ring Road (ORR) and Whitefield have been performing well and garnering some serious interests. More recently, north-east and north Bangalore have also come into prominence.
Good connectivity and presence of ample completed and under-construction residential catchments in areas along the ORR has led to the maximum traction in the office space segment. Many companies are going for the ORR and surrounding areas because of the availability of quality spaces at competitive rentals and presence of good civic and social infrastructure. Bangalore north, on the other hand is emerging as a preferred location due to its proximity to the airport and is connected well by the ORR to other areas of the city.
Cushman & Wakefield’s Executive Director Mr. Naveen Nandwani explains, “Presence of international schools, hospitals, upcoming social infrastructure, ongoing infrastructure initiatives such as the Hebbal-airport expressway, developing residential catchments and present/upcoming quality office space supply are factors leading to the emergence of north Bangalore.”
As per the CBRE’s ‘India Office Market View Report-Q4 2013′ report, the commercial leasing activity picked up in the PBD of Whitefield and Electronics City in the fourth quarter of 2013. An office space of around 0.69 million sqft has been added to the existing stock in the Whitefield region.
CBRE’s Deputy Managing Director, South Asia, Ram Chandnani elaborates, “Owing to persistent demand from corporate occupiers, the Sarjapur-ORR belt observed healthy absorption. On the supply side, this micro-market witnessed supply addition of around 1.20 million sqft. Owing to healthy demand-supply dynamics, this micro-market continues to remain a growth corridor. North Bangalore continued to witness significant occupier interest as around 0.82 million sqft of Special Economic Zone (SEZ) space was transacted in this micro-market. Significant supply addition over the next few months is likely to spur transaction activity here.”
The research by CBRE also indicates that transaction activity in Bangalore was propelled in the fourth quarter of 2013, with SEZ space garnering occupier interest with the city witnessing large commitments. Going forward, the ORR stretch is bound to see appreciation in the transaction activity owing to infusion of fresh Grade A commercial and SEZ space over the forthcoming quarters.
Ram further adds “Also, the north and south Bangalore markets are likely to witness an increase in demand for office space. The city’s supply pipeline is dominated by a healthy mix of commercial and large SEZ developments, which should continue to drive demand for SEZ as well as non-SEZ space. Rental values are expected to maintain stability across all micro-markets barring the ORR, Whitefield and north Bangalore where upcoming supply and occupier interest will define market dynamics in the short to medium terms.”
Cushman & Wakefield’s statistics for the state reveal that the total leasing activity in the city was recorded at approximately 8.50 million sqft, which is very similar to that of 2012. However, the total leasing comprised net absorption recorded at over 4.50 million sqft and the rest was for relocation and/or consolidation activities.
Naveen further explains, “The net absorption was relatively low given the prevailing market conditions, which forced companies to be cautious with their expansion plans. In an increasing trend, occupiers, primarily belonging to IT-ITeS sector, used the opportunity to consolidate their operations in order to gain operational efficiency. Around 92 percent of the total net absorption took place in Grade A properties. Meanwhile, the city witnessed around 5.80 million sqft of supply of which close to 90 percent constituted of Grade A spaces. The higher percentage of Grade A absorption and supply reflected clear preference for quality spaces.”
Source: The Times of India (Bangalore)
CBRE, Cushman & Wakefield, good connectivity, Hebbal-airport expressway, Hospitals, India Office Market View Report-Q4 2013, international schools, Naveen Nandwani, North Bangalore, office space segment, ongoing infrastructure, ORR, Outer Ring Road, PBDs, Peripheral Business Districts, Ram Chandnani, residential catchments, SEZ, Special economic zone, Under construction, upcoming social infrastructure, Whitefield
