BANGALORE: The city’s realty market’s dynamics changed with the IT revolution that swept across its landscape. The ‘Information Technology Capital of India’ soon became a thriving hub for professional education and employment opportunities, and its realty market started booming.
To cater to the needs of the large IT industry, Special Economic Zones (SEZs) were earmarked in and around the city for the establishment of their large facilities. These zones became the defining landmarks for the city’s realty growth in the years to come.
“Over the years, the commercial activity in the city has shifted from the Central Business District (CBD) and off-CBD to suburban areas and peripheral areas. The suburban micromarkets of C V Raman Nagar, Koramangala, and Bannerghatta Road currently have a total stock of 27.70 million sqft. These micro-markets are set to record an additional 2.70 million sqft in supply in the next three years.
Increasing space requirements due to the growth of the IT sector, cheaper rentals for better quality spaces and access to tal ent pool in suburban residential hubs has propelled large MNCs to consolidate and relocate their operations to peripheral micromarkets along the Outer Ring Road, which has an existing stock of 28.80 million sqft and an under-construction supply of around 10.10 million sqft,“ says Naveen Nandwani, Executive Director, Cushman and Wakefield.
Cut to the present, the commercial realty market in the city is growing even as companies are looking at diversifying and outsourcing their services. “Bangalore’s commercial leasing market had witnessed healthy trans action activity in the first quarter of 2014,“ says Karun Varma, Managing Director Strategic Client Services and New Businesses, DTZ.
Prospects for further growth The areas around the Outer Ring Road (ORR) have always presented a window of opportunity for the expansion of commercial realty growth. “Whitefield is an attractive micro-market as it will witness nearly 2.50 million sqft added to its existing stock of 27 million sqft. Further, post the relocation of the airport to the northern part of the city , areas in this sub-market have been witnessing notable real estate activity. North Bangalore is anticipated to be the new upcoming commercial hub with in frastructure initiatives like the seamless ORR, Hebbal-airport expressway and broadening of Bellary Road, enhancing the connectivity to this sub-market,“ says Naveen.
According to him, currently, the north of the city houses over 10 million sqft of office space and a further three million sqft of space is currently under construction. Areas with current and upcoming commercial developments in north include Bellary Road, Thanisandra Road, Tumkur Road and the northern part of ORR (Hebbal).
The ORR is characterised by controlled supply ensuring low vacancy levels and healthy absorption rate with appreciation in rentals. This micro-market will continue to attract new entrants and occupiers looking at expansions.
“The ORR continues to be a preferred destination of corporate occupiers owing to proximity to employee catchments, connectivity, improving infrastructure and multiple large tech parks and SEZs. Pre-leasing or pre-commitments are prevalent in this micro-market owing to limited ready-to-move-in supply .
Although new supply in the office market has been modest in the first quarter, construction activity remains robust and the supply pipeline is large,“ adds Karun. North Bangalore is witnessing large supply infusion. It holds long-term potential with the developing infrastructure and growing residential market.
“Sarjapur Road too has caught the eye of commercial developers as the next destination owing to the existing residential catchments, developing social infrastructure and proximity to the ORR. Developers hold land parcels in this location and it will witness supply infusion to address the spill-over demand from the ORR,“ explains Karun.