[ecis2016.org] Despite the COVID pandemic, there was moderate-to-good levels of pre-commitment for new office spaces, while older commitments in Bengaluru’s commercial property market, were also honoured in 2021
The commercial real estate market in Bengaluru showed signs of maturity in 2021 and there were a lot of pre-commitments that were honoured, in spite of the various challenges posed by the COVID-19 pandemic. There were clear signs of long-term confidence among the occupiers, who see the Bengaluru commercial real estate market as vital to their overall operations. However, there were many landlords and tenants who also adopted a ‘wait and watch’ policy.
You are reading: Net absorption, new completions of office space in Bengaluru increases in 2021; Warehousing segment does well too
Despite the multiple COVID-19 waves, there were moderate-to-good levels of pre-commitment for new office real estate projects. The older commitments in Bengaluru’s commercial property market, were honoured. The IT capital of India witnessed a 13% jump in net absorption of Grade A office space in 2021 at 7.8 million sq ft (msf) as against 6.9 msf in 2020. The net absorption jumped 94% quarter-on-quarter in Q4 2021, according to a report by JLL India.
The new completions in Bengaluru’s commercial property market witnessed a significant jump of 43% at 14.4 msf in 2021, as compared to 10.1 msf in 2020, said the report.
Source: JLL India
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The work-from-home mode led to a jump in vacancy levels in the city. Average vacancies shot up to 10.45% in 2021, as compared to just 6.1% in 2020. The rents increased marginally in Bengaluru’s Grade A office space market at Rs 81.35 per sq ft per month in 2021 as compared to Rs 78.55 per sq ft per month in 2020, said the research report by JLL India.
Bengaluru’s commercial space micro markets
The secondary business district (SBD) submarket did well in 2021. It witnessed the maximum jump in office space demand. Even the submarkets of Whitefield and Electronic City showed buoyancy in 2021. The IT/ITeS sector accounted for nearly 54% of the overall space taken up in Bengaluru’s office space market. This was followed by telecom, real estate, healthcare, biotech and other industries.
The year 2021 saw some major buildings’ completions like ‘BCIT Block 3 – Wing A and B’ in SBD having a gross leasable area of 1.5 msf and ‘Bagmane Capital Luxor – South Tower’ in SBD having a gross leasable area of 0.3 msf.
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Scheduled completions in Bengluru’s commercial property market
There are a few large buildings under construction and are scheduled to be completed in 2022 like ‘Bagmane Capital Rome – South’ in SBD having a gross leasable area (GLA) of 0.8 msf, ‘Vaishnavi Tech Square’ in SBD having a GLA of 0.5 msf, ‘Brigade Triumph’ in SBD having a GLA of 0.2 msf and ‘Bagmane Capital – Rome’ in SBD having GLA of 0.8 msf.
The upcoming supply of Grade A office spaces are mostly concentrated in the SBD submarket. The rents for office spaces are expected to remain largely stable and will probably see growth only after 2023, as landlords are focusing on retaining their existing tenants. They are even stretching themselves to offer flexibility to clinch deals. However, the net absorption of office spaces in the near term is expected to be on the lower side and vacancies are expected to be in the range of 10%-12%.
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Also read: Net absorption, new completions of office space in Mumbai jumps in 2021
Warehousing and logistics property market in Bengaluru
Bengaluru saw net absorption of 6.4 msf of warehousing and logistics space and 2.4 msf of new supply in 2021, according to a report by CBRE.
The e-commerce sector accounted for 36% of the absorptions in 2021, followed by 3PL at 28% and retail at 14% in 2021, said the CBRE report.
Some of the major deals in the Bengaluru warehousing space market was that of Flipkart taking up 4 lakh sq ft space on rent in ‘Independent Warehouse’ located on the eastern corridor in the city. Another important deal was that of Puma leasing 3.46 lakh sq ft space in ‘RKV Industrial and Logistics Hub’ located on the northern corridor of the city. Another major deal was that of a leading e-commerce player taking up 4 lakh sq ft space in ‘LOGOS Warehouse’ located on the southern corridor, said the CBRE report.
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