Bengaluru Grade A office supply drops 51% to 2.31m sq ft in Q2 | Real Estate Asia
, India

Bengaluru Grade A office supply drops 51% to 2.31m sq ft in Q2

The secondary business district dominated new completions.

In a report, JLL said Bengaluru’s quarterly office supply was down by 51% q-o-q at 2.31 million sq ft in Q2.

New completions were headlined by the secondary business district (SBD) submarket, which accounted for 79% of the new supply added in the quarter. According to the report, major buildings completed in the quarter included the Wells Fargo BTS – Embassy Tech Village in SBD ORR, MFAR Wilshire in Whitefield and Brigade Deccan Heights in SBD North.

Here’s more from JLL:

With an overall pre-commitment rate of 28% in new completions, vacancy was down by 40 bps q-o-q to 12.6%. The core office markets and tech parks continue to operate at 90%–95% occupancy levels, while peripheral corridors struggled with higher vacancy levels.

Occupier activity slows slightly

With occupiers being cautious in decision-making, leasing activity in 2Q23 was down 15.3% q-o-q, and down 11% h-o-h. This was anticipated given global headwinds and the tech sector being muted, but the impact was not as pronounced as earlier expected. Net absorption was largely steady q-o-q, indicating stable trends in the city.

Demand was led by the SBD submarket, with the Outer Ring Road accounting for two-thirds of market activity as it remains the most sought-after corridor. Space leased by tech in 2Q23 was up by 2.3-times q-o-q, accounting for the biggest share in the quarterly leasing volume. Flex remained quite active in the quarter and continued to drive market activity with a share second only to tech.

Rents strengthen by 1.2% q-o-q

Rents in key corridors and in prominent projects strengthened as demand for quality assets remained healthy. Maximum rent growth was seen in the CBD and SBD corridors.

Investor interest in core and build-to-core assets in key corridors remained steady, and hence, capital values moved in tandem to keep yields steady in the quarter. Going forward, yields are expected to compress for core assets.

Outlook: Active enquiries and pre-commitments to support demand

Despite global headwinds and occupiers deferring/delaying their space plans, the demand pipeline remains strong, with 15–18 million sq ft of active space enquiries. Global capability centres (GCCs) across tech, financial services, engineering/manufacturing, consulting and flex are expected to be the main demand drivers going forward.

The city remains a major global offshoring hub, and given its cost advantages and talent pool, it is likely to remain high on the radar of firms looking for strategic business outcomes centred around R&D and tech. Demand is expected to remain strong in the medium term even though global macroeconomic conditions did not have as big an impact on market activity as earlier predicted.

 

Note: Bengaluru Office refers to Bengaluru's overall Grade A office market.

 

Join Real Estate Asia community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Exclusives

How Metland Indonesia deals with weaker residential purchasing power
The real estate firm continues to expand with residences that are attractive to consumers because of pricing, the ‘growing house’ concept, and sustainable features.