BANGALORE: Bangalore witnessed a large drop in office space absorption of 39 per cent in 2013 as compared with last year. The city office space absorption this year is around 45.76 lakh square feet as against 75.17 lakh square feet last year.
On the supply side, it is lower by 34 per cent at 58.19 lakh square feet in 2013 as compared with supply of 88.07 lakh square feet in 2012. Vacancy level in the city stood at 14.1 per cent in 2013.
“The occupiers in Bangalore are anticipated to remain cautious during the coming year. Overall absorption, rents and vacancy levels are expected to be at par with 2013 levels,” said Sanjay Dutt, Executive Managing Director, South Asia, Cushman & Wakefield.
Outer Ring Road and Whitefield were the most active commercial markets recording 46 per cent and 30 per cent of the total net absorption respectively. “The year (2013) was characterized by sizeable relocation and consolidation activities amounting to over 50 per cent of the leasing activity,” said Dutt.
“Given the prevailing market conditions, the occupiers (primarily belonging to IT/ITeS sector) utilised the opportunity to consolidate their operations in order to gain operational efficiency and cost advantages by negotiating long term deals for large spaces at better terms,” he added.
Jones Lang LaSalle said, “The combination of stable demand and restricted supply was instrumental in keeping the city’s overall vacancy rate very low during November.”
The major transactions during November included Fiberlink, Continuous Computing, UHG and Novo Nordisk.
“Meanwhile rents continued to remain stable across the city, while capital values witnessed marginal appreciation on the back of demand and investor sentiment,” Jones Lang LaSalle said.
In Bangalore IT/ITeS sector continued to be the major demand driver accounting for over 60 per cent of the transaction activity followed by manufacturing (8.5 per cent) and consulting sectors (7.7 per cent).
“Outer Ring Road and Whitefield area was active mainly due to the availability of quality space options at competitive rentals, proximity of residential catchments and good support infrastructure,” explained Dutt.
Out of total pre-commitments of 2.4 million square feet in 2013, over 77 per cent were concentrated around the peripheral locations of Outer Ring Road.