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Bangalore remained in the forefront of the commercial real estate market in the country in 2018 and witnessed hectic construction and leasing activity. The gross leasing transactions recorded in 2018 marked the second consecutive year-on-year upswing and the year also saw the highest gross leasing levels in the whole of last decade, according to a research report prepared by real estate consultancy Knight Frank.
You are reading: Bengaluru Office Market Update-2018
The IT, ITeS and technology companies led the growth in the leasing activity, along with manufacturing and BFSI (Banking, Financial Services and Insurance) sectors. These industries recorded the largest deals, both in terms of individual leases as well as on industry segment basis.
Leasing Volumes
The year 2018 saw total leasing volume of around 13.4 million square feet, up from about 11.7 million square feet in 2017, registering an increase of 15 percent. This translates into the most impressive year in terms of total area lased in the city in the last 10 years.
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Significant hiring in payment gateway companies and food app firms have also contributed to more absorption of office space in Bengaluru.
Rentals
The average rent in the city has also shown an increasing trend, a very promising trait for the real estate developers. The average rentals in the city stood at Rs 74 per square feet per month in 2018, up from Rs 63 per square feet per month in 2017. This marks a jump of 17 percent in 2018 over the previous year, according to the report. The increasing rental trend is impressive not just in India but in the whole of Asia, data shows.
There was a healthy six percent addition to the stock of commercial real estate in the city in 2018. The stock stood at 149 million square feet in 2018, up from 141 million square feet in 2017.
| 2018 | 2017 | Change Year-On-Year | |
| Average Rent( Rs/sq ft/month) | 74 | 63 | 17% |
| Transactions (In million sq ft) | 13.4 | 11.7 | 15% |
| Stock (In million sq ft) | 149 | 141 | 6% |
Since there was very good office leasing activity in 2018 in the city, the vacancy level for commercial real estate market remained low at just 4 percent.
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Hot Micro Markets
Out of the total leasing activity, Outer Ring Road (ORR) accounted for the highest share in the leasing volumes. However, there has been limited new supply in this micro market as compared to previous years. Despite limited supply, the ORR remains the fastest growing tech corridor and the most attractive for the corporate tenants. Demand for commercial development here has been outstripping for many years. Completion of several blocks in an IT Park being developed here in 2018 eased the supply shortage a bit.
The micro market of PBD (peripheral business district) North also witnessed strong leasing activity. It saw a sharp 216 percent jump in leasing activity in 2018, as compared to 2017 owing to completion of several commercial projects here.
The multi nationals like Samsung, Google, JP Morgan, Xiaomi, ABB, Nvidia and Walmart were the major occupiers for office space in 2018.
Source: https://ecis2016.org/.
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