Office space in demand despite slowdown
Honeywell Technology Solution, one of the global technology firms, is taking up a million square feet of office space in Bangalore. This is the second biggest office leasing deal in the last two years in the country after Goldman Sachs took up 1.6 million sq ft in the city a year ago.
RMZ has quoted Rs 48 per sq ft which is affordable, Honeywell Technology Solutions is going to pay around Rs 58 crores as annual rental for the office space in RMZ’s special economic zone, RMZ Ecoworld.
A spokesperson from Honeywell confirmed the transaction but did not provide any details. If sources are to be believed, then in past Honeywell was looking for locations which would give more efficiency and co-location synergies. This would have given better optimization and productivity opportunities.
Honeywell Technology Solutions, headquartered at Bangalore, is the engineering and technology arm of the $37-billion US firm Honeywell International. According to people familiar with the matter said that Honeywell Technology Solutions will use around 5 lakh square feet of the space for merging its existing offices in Bangalore into one location while the rest of the space will be used for business expansion.
The HTS spokesperson said that the company has a plan for long term direction and strategy and it will be taken up in a phased approach.
The 50 acre RMZ Ecoworld which was earlier known as Adarsh Tech Park, was recently picked up by Baring Private Equity Partner and RMZ for Rs 1,000 crore. In this deal RMZ got 1.4 million square feet of built and leased space and rights to build another 6 million square feet of office space on the land parcel on the Outer Ring Road in Bangalore.
HTS has been in talks with Mantri and RMZ developers for office space as they wanted to move out from the recent office space in south Bangalore because of the upcoming metro rail work. The company decided to go with RMZ because they already have space in the SEZ, which was earlier run by Adarsh Developers.
This deal came as good news for the domestic commercial office business, which shows signs of recovery after remained depressed for a year. According to CBRE, businesses hired more office space in the first quarter of 2013 compared to a year ago.
It’s noticed that office space absorption had gone down from about 35 million sq ft in 2011 to 26 million sq ft in 2012.
Recently, Sahara Group has also acquired a 25 acre plot in Bangalore’s information technology hub Whitefield, the plot was originally owned by BPL, the television and white goods maker for Rs 149 crores.
Sahara had acquired the plot from Asset Reconstruction Company of India (Arcil) and they are going to utilise the land according to the main objectives of the company. Sahara has made the payments as per the terms of bidding process and they have paid around Rs 100 crores till date.
The particular land ended up being owned or operated through a couple of BPL party firms, BS Devices along with BS Refrigerators. Arcil acquired the land under SARFAESI Act from numerous finance institutions along with banking institutions following BPL defaulted on its debts payment.
According to the terms and condition of the bid, the land in Whitefield which Sahara bought can only be used for commercial purpose. Sahara is planning to construct a mixed used commercial building which will have a hotel and an office tower. They are yet to reveal the name of the project.
The tender floated by Arcil quoted a reserve price for two plots of land at 39 crores and 55 crores respectively. It was also mentioned that the successful bidder will have to pay dues of approximately Rs 49.37 crore to the Karnataka Industrial Area Development Board to get the sale deed and also clear labour dues.
Sahara’s group companies Sahara India Real Estate Corp and Sahara Housing Investment Corp were recently under the spotlight with the market regulator Sebi charging them for illegalities in raising funds.
According to a property consultancy, Bangalore was ranked 14 in the world in terms of total occupancy costs per workstation per annum in 2012. Bangalore is behind other cities like Manila, Bangkok, Chennai and Pune. Hyderabad is the second most affordable office market in the world after Surabaya (Indonesia).
In Gurgaon, American Express and Cairn Energy have leased 2 lakh square feet of space, Convergys has taken up 2.5 square feet while in Noida, Fiserv has taken up 2 lakh square feet. In Mumbai, Colgate has signed up 1 lakh square feet of space in Powai.
Bangalore, too, is picking up in leasing of office space. Apart from Goldman and Honey well, tech firm Cisco has picked up 7 lakh square feet of office space while, American financial services company Wells Fargo has signed up 5 lakh square feet in Bagmane SEZ in Bangalore.
2013 OUTLOOK FOR COMMERCIAL REAL ESTATE
In 2013, Outer Ring Road will work exceedingly in terms of commercial property absorption. It is all because of the connectivity, availability of SEZ and non SEZ office spaces and close proximity to employee catchments. Due to the strong economic growth and good social infrastructure factor, Whitefield will not going to lose its charm in 2013.
North Bangalore has a host of civic infrastructure projects, large commercial developments and new residential options that have changed the face of the locality, over the past few years. Bengaluru International Airport has been the main reason for the change in this locality.
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Commercial real estate demand going down
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