Bengaluru market sees uptick in office space absorption, grows 6.5% in 2018

E-commerce sector, firms providing co-working spaces drive demand in Bengaluru with 6.5 per cent growth in six months this year

In the first half of 2018, co-working operators doubled their absorption of office space at 1.27 million square feet, 19 per cent of the total pie.

“We have done a deal with almost every major developer in the country. We have leases with Prestige in Bengaluru, Oberoi in Mumbai and are doing two deals with DLF now. I am now not just a tenant and am bringing more business to developers. We may start with two floors, but might end up taking another four floors because that’s the kind of demand we have been witnessing,” said Karan Virwani, Director at WeWork India, had told Business Standard in a recent interview.

Though the Bengaluru market has seen an uptick in office space absorption, the supply addition was far too short of the demand, resulting in dip in overall inventory level.

According to the Knight Frank, the overall vacancy in the city’s office market dipped to 3.5 per cent in the first six months when compared with the year ago period.

While the city absorbed 6.5 million square feet of office space in H1, only 3.7 million square feet of space was added during this period. This has resulted in increase in rentals by around 17 per cent in Bengaluru, the report added.

Realtors also believe that the demand uptick is sustainable in the short to medium-term. “Commercial real estate will continue to do well as there is not much supply,” Pai said. The real estate firm plans to invest around Rs10 billion in coming years in the commercial real estate space.