Bengaluru's vibrant office space mart

More boost from mega twin leasing deals from IBM, EY; city still first choice for most MNCs seeking to enter or expand, data show

Information technology giant IBM and the shared services arm of UK-based auditing and consulting major EY are in the process of taking 500,000 sq ft of office space each at different business parks in Bengaluru, the country's IT capital, said a source.

The source said IBM has committed to take the office space in Bhartiya City, an integrated property project at Thanisandra in Bengaluru, and the EY arm has taken similar space in Bagmane Tech Park, owned by the Bagmane group on the Outer Ring Road.

It appears IBM is expected to pay around Rs 45 a sq ft or Rs 27 crore yearly as rent. EY is expected to pay Rs 65 a sq ft or Rs 39 crore a year. Both deals are in line with market prices, said the sources.

IBM and Bagmane did not respond to e-mails. EY confirmed the news. Ajay Malhotra, executive director at the Bhartiya group said: "The entire building with 550,000 sq ft has been leased out and the majority taken by IBM."

Though the size of office lease deals in Bengaluru has come down compared to last year, the numbers of these are increasing at a fast clip, sources said.

Recently, US based banking giant JPMorgan took 220,000 sq ft at Embassy Golf Links Business Park in Bengaluru for a support centre. JC Penney, one of the largest US retailers, took 130,000 sq ft at Embassy Manyata in Bengaluru and has an option to take similar other space. Among the major leasing deals in Bengaluru last year were financial giant Wells Fargo leasing 860,000 sq ft at Embassy Tech Village, oil major Shell leasing 788,000 sq ft at RMZ Eco World and US e-commerce giant Amazon leasing 500,000 sq ft at Constellation Business Park. All three sites are on the Outer Ring Road.

According to Ashok Kumar, chief executive of Cresa Partners, the city leases around 3 million sq ft of office space every quarter. "Bengaluru is the first choice of any multinational company entering or expanding in India. One reason is availability of quality engineering and experienced talent. The city climate and entire ecosystem are very conducive for the IT and IT-enabled services (ITeS) industry," he said.

Added Anuj Puri, chairman and country head, JLL India: "Bengaluru has reached scintillating heights as a commercial real estate destination, which is why it tops the JLL City Momentum Index rankings for Asia Pacific. This is largely on account of the city's rapid progress in technology and global connectivity has helped drive real estate growth."

According to Colliers International, the city, with 13.43 mn sq ft of annual office space absorption and 12.85 mn sq ft of new construction, continues at number one position - 33 per cent and 41 per cent, respectively, in total absorption and new supply among the eight major cities in the country last year.

The city's traditional primary office demand driver, IT/ITeS, took 57 per cent (7.7 mn sq ft) of the total absorption, followed by the banking, financial services and insurance segment at 20 per cent and manufacturing at 13 per cent. Others were nine per cent.
RECENT BIG DEALS

• Wells Fargo leasing 860K sq ft in Embassy Tech Village on Outer Ring Road
• Shell leasing 788K sq ft at RMZ Eco World on Outer Ring Road
• Amazon leasing 500k sq ft at Constellation Business Park on Outer Ring Road
• JPMorgan leasing 220K sq ft at Embassy Golf Links on Outer Ring Road