Lowe's Services takes the 2nd largest lease deal this year

A deal by US-based Lowe’s Services to lease 490,000 sq ft in Bengaluru, second largest of the year, raises hopes of steady growth in the market for office space.

Countrywide absorption of office space in January-June was 18.9 million sq ft, nearly 2 per cent less than in the same period a year ago, according to property consultant Colliers International.

“We expect demand to remain steady, with some large consolidation and relocation in Bengaluru, Mumbai, Pune and the National Capital Region. Overall office space demand is expected to see a steady rise,” said Ravi Ahuja, executive director, office services and investment deals, Colliers. 

Lowe’s Services is part of the US-based home improvement retailer Lowe’s Companies.  It leased the space in Manyata Tech Park on the Outer Ring Road of Bengaluru, a property owned by Embassy Office Parks, a joint venture between Embassy and private equity firm Blackstone.

The deal was struck at Rs 70 per sq ft, a source said. At this rate, the rent works out to Rs 41 crore a year. Lowe’s has its India head office in the same office complex.

A Lowe’s spokesperson said, “We will not be able to comment on this.” An Embassy spokesperson said, “We decline to comment on this.”

In 2015, Lowe’s Services announced the opening of a 110,000 sq ft global innovation centre in Bengaluru. It was planning to hire 500 people.

With sales of $65 billion in 2015-16, Lowe’s and its related businesses operate or service more than 2,370 home improvement and hardware stores. Recently, it announced the appointment of James Brandt as managing director (MD) for its India operations.

Many US firms, such as JP Morgan, have opened their offices in Bengaluru in the recent past. “Bengaluru is still the preferred destination for companies due to availability of a skilled workforce and reasonable lease rents,” said Ashok Kumar, MD of Gennext Partners, a commercial real estate services firm.

Bengaluru continues to dominate the office space market and recorded a third of the total leasing volume in the country. About 3.25 million sq ft of absorption had taken place in Bengaluru in April-June, Colliers said.

“We expect the leasing momentum to continue.  About 43 per cent of the total leasing was concentrated in special economic zones driven by a couple of large (above 100,000 sqft) transactions,” it added.