Office space demand up by 40% to 9 million sq ft

Demand for office space in Bangalore has seen a 40 per cent rise in 2010 over the previous year with a overall absorption reaching around 9 million sq ft during this period. Most of the demand in Bangalore was driven by global MNCs and IT companies during last year.

“There has been significant improvement in market activity and it is expected that micro markets like Whitefield, Outer Ring Road and North Bangalore will continue to witness sustained interest by corporate occupiers in 2011 as well,” a research report of real estate consultancy firm, CB Richard Ellis said.

It also said that infrastructure initiatives like the MRTS, signal free outer ring road are likely to further propel the market. Some of the major corporate occupiers which have committed to large space in 2010 in Bangalore are HP, IBM, Accenture, Capgemini, TCS, SwissRE, JP Morgan, Schneider, Wells Fargo, Deloitte, Siemens and Volvo among others.

Meantime, overall absorption of office space in 2010 stood at around 32 million sq ft across seven cities in 2010 as per the report.

The report covers cities like National Capital Region (NCR), Mumbai, Bangalore, Chennai, Hyderabad, Pune and Kolkata. The demand for office space was led by NCR, Bangalore, Hyderabad and Mumbai during this period,the report added. Referring to the demand scenario, Anshuman Magazine, managing director of CB Richard Ellis said, “Last year has seen a resurgence in the demand for office space fueled by business expansion of corporate India in the backdrop of economic recovery. New economy sectors like telecommunications, pharmaceuticals, FMCG, besides banking and financial services led the overall demand for office space.”

He also said that Indian office market would continue to see increased transaction volumes consequently leading to higher absorption levels in the medium term.

Further, supply of office space and rentals witnessed an upward trend in 2010. On the supply front, around 55 million sq ft was lined up for completion in the next two years with 60 per cent of the supply coming from NCR, Mumbai and Bangalore.

Rental values have also seen a steady increase in the central business districts (CBD) in 2010 on the back of resurgent demand and declining vacancy levels. “The demand for quality CBD space continues to rise in major cities like Delhi and Mumbai,” the report said.

The report, however, said that due to absence of adequate space in CBD, occupiers were moving towards suburban areas.