Bengaluru adds 1.6m sq ft of new office stock in Q3 | Real Estate Asia
, India

Bengaluru adds 1.6m sq ft of new office stock in Q3

This is from a total of five new completions during the quarter.

According to a JLL report, around 79% of the new completions in Bengaluru were recorded in the SBD submarket, with key projects being Nucleus Tech Park and Vaishnavi Tech Park – North and South Towers. Prestige Minsk Square, entirely pre-committed to by Apple, completed near Cubbon Park, and was a new completion in the CBD after a gap of several quarters.

At the end of 3Q22, Bengaluru’s Grade A office stock stood at 187 million sq ft with the SBD constituting 64% of total stock. Supply and demand were in equilibrium and pre-commitments held vacancy rate in check. The vacancy rate fell by 20 bps q-o-q and stood at 11%, a positive sign given the quantity of office stock in the city.

Here’s more from JLL:

Net absorption recorded at 1.7 million sq ft, falling by 62% q-o-q, but up by 38% y-o-y as a large share of the quarterly demand came from pre-commitments in the newly completed buildings. About 89% of the new completions were already pre-leased by tenants like Adobe at Nucleus Tech Park IV, Apple at Prestige Minsk Square and Smartworks at Vaishnavi Tech Park.

Significant deals of over 100,000 sq ft were recorded from companies like Incubex, VMWare and Allegis, among others. Several deals in the quarter were also recorded in the Whitefield submarket after a brief slowdown over the last few quarters. IT/ITeS and flex space providers were the leading occupier segments in terms of demand in 3Q22.

Rents remain largely stable, up only by a marginal 0.2% q-o-q

Bengaluru office rents remained flat as only the leading developers, such as Prestige, Embassy and Bagmane, were able to justify a q-o-q increase in rents. While the CBD and SBD are more mature, with correspondingly slower rent movement, Whitefield posted the highest q-o-q jump in rents largely due to the number of leases recorded there after a gap of a few quarters.

Due to the devaluation of the rupee in the quarter, prime corridor rents remained at USD 1.00 to USD 1.25 (INR 55 to INR 127) per sq ft per month, which continued to be beneficial considering the kind of tenant mix present in the city, made up largely of MNCs and IT/ITeS firms.

Outlook: Bengaluru to remain popular among global office occupiers

By the end of 2022, Bengaluru is expected to have Grade A completions totalling about 12.3 million sq ft, as most key developers in the city, like Brigade, Bagmane, Embassy, Prestige and L&T, are optimistic regarding project completion timelines.

As most of the occupiers in Bengaluru are MNCs, demand from them is expected to remain stable, albeit tempered by caution as concerns about global macroeconomic headwinds grow. By the end of 2022, net absorption is set to clock in at 9.4 million sq ft, on par with the city’s average annual net take-up.

 

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