Bengaluru continues to be one of the leading drives of office space leasing in India: JLL

• During H1 2020, Bengaluru remained the strongest market for office leasing; witnessed an overall absorption of approx. 7.5 million sq. ft.
• The city is likely to witness new supply of at least 4 malls between 2021 and 2022 with over 2.55 million sq ft
• E-commerce, BFSI and pharma / healthcare are contributing to nearly 50% of the overall absorption
• The city has remained a landlord favorable office market for several years now.
• CBD & ORR (Z1-Z3) are the most preferred micro markets for occupiers & have shown strong resilience even during the pandemic year

Bengaluru, January 09, 2021: The uncertain economic scenario has forced corporate finance heads to look at real estate assets as a source of funds so that the businesses can reduce the debt. Amidst the current unprecedented economic situation, Bengaluru continues to be one of the leading drives of leasing in India, according to JLL.

The IT hub of India, Bengaluru witnessed largest ever influx of FDI in commercial real estate market as marquee foreign real estate funds reportedly invested approximately USD 4 billion to increase their portfolio of core assets, reflecting the underlying resilience of the market.

“Bengaluru continues to dominate office leasing market with an overall net absorption of ~7.5 million sq ft in 2020. The overall vacancy level of sub-10% has helped this segment weather the 2020 challenges. While the vacancy is likely to rise to 13-14% in the coming year, interestingly, the new demand led by large e-commerce companies, BFSI & healthcare sector occupiers has also witnessed a sharp rise with a number of large occupiers evaluating additional growth and consolidation”, said Rahul Arora, Managing Director (Bengaluru), JLL India.

“The city has remained a landlord favorable office market for several years, with slowdown in construction & lack of funding, this trend is expected to continue”, he added.

Bengaluru continues to remain strongest market for office leasing

While H1 2020 witnessed a countrywide slowdown in leasing activity owing to the pandemic and nationwide lockdowns, Bengaluru continued to remain the strongest market for office leasing and witnessed an overall absorption of approximately 7.5 million sq ft. While, approximately 11 million sq ft was expected to be added, just 9 million sq ft was completed in during the year as developer focused on pre-committed spaces and went slow on the speculative space. Many small to mid-sized occupiers terminated spaces within the CBD & SBD markets which led to an increase in the overall vacancy.

Bengaluru has remained a landlord favourable office market for almost 5 years now, overall vacancy level of sub 10% helped this segment weather the 2020 challenges. The vacancy levels are expected to rise to 14%. Markets such as ORR (Z1-Z3) and SBD City continued to be the most preferred micro markets for occupiers, markets such as Whitefield, North Bengaluru (N2) and West Bengaluru continued to witness increase in vacancy levels or stagnation of rentals with limited occupier interests. The headline rentals across the city remained stable with developers offering softer commercial terms such as extended rent-free periods.

Demand drivers in Bengaluru continued to be e-commerce, BFSI and Pharma / Healthcare companies contributing to nearly 50% of the overall absorption.

Bengaluru has fast turned into a land of opportunities owing to the growth of Auto and ancillary, warehousing, EV and Aerospace Sector

Post pandemic industrial enquiries flowing into the state has significantly increased. Across – Auto and ancillary, EV and Aerospace Sector. Bengaluru absorption has been predominantly been led by E-commerce warehousing and 3PL players, this trend will further continue over the years owing to growth of e-commerce penetration with the growing importance of city warehousing to meet the last mile logistics demand.

Corporate Comm India (CCI Newswire)