B'lore absorbs 5.1mn sft of office space in 6 mths

Demand for office space in Bangalore continues to rise. Builders have received commitments to occupy over 5.1 million square feet of office space in the first six months of this year.

This comes on top of the 3.2 million square feet of absorption that has taken place in buildings that are at various stages of construction.

The demand for office space is growing at a healthy pace and absorption for the rest of the year is likely to be along the same lines, said Ram Chandnani, head (south India operations), CB Richard Ellis.

The software services sector has been the fastest growing in the IT/ITeS space, again the main driver of demand for office space in Bangalore.

However, the high-end engineering companies are also expanding and continuously moving into consolidated large office space.

About 9.4 million square feet of commercial space is under construction across the city in all micro markets (CBD, off-CBD and suburban) and will be ready in the next two quarters. Of this, over 4.5 million square feet of office space is coming up in Whitefield alone, said Ram Chandnani.

Rental values have seen a marginal increase in the CBD (central business district) areas like M G Road, Brigade Road, Commercial Street among other areas and the non-CBD (non-central business district) areas like Koramangala, Indiranagar, Jayanagar and J P Nagar).

This is mostly owing to the lack of quality supply. Rentals in the city have remained stable in the other micromarkets. Capital values have witnessed a marginal increase across all micromarkets, he added.

In off-CBD areas, absorption continues with the existing corporates expanding and consolidating their operations and new entrants starting operations. Companies choosing non-CBD areas prefer to locate in proximity to employees, thus reducing the expenditure on employee transit.

However, due to a lack of ready space in this micro-market, corporates already based in the non-CBD areas are being forced to look elsewhere for expansion. About 9.90 lakh square feet of grade 'A' space is under construction in non-CBD areas and will be ready for possession in the last two quarters of 2006.

The suburban and peripheral areas continue to find favour with corporates with a long-term commitment to operations in the city. Projects in these micromarkets offer large floor plates, car parking facilities and expansion opportunities, said Ram Chandnani.

Keeping pace with the growing demand for office space in these micromarkets, about 7.8 million square feet of commercial office space is slated to come into the market over the next two quarters.