B'lore office space rentals up...

Bangalore's office space rentals witnessed an increase of 10-20 per cent in the first quarter (Q1) of financial year (FY) 2007-08, the rate of growth slowing down from that achieved in the previous quarter.

Rentals in the central business district (CBD) were in the range of Rs 75-90 per square foot per month, in off-CBD Rs 65-70 per sft per month, secondary business district (SBD) Rs 42-45 per sft per month and peripheral business district (PBD) Rs 28-38 per sft per month, said DTZ, an international property consultant, in its 'Bangalore office market brief'.

Excess supply is putting pressure on rentals in Whitefield with transactions being done at 25 per cent lower rentals than last year.

As for the vacancy levels, it ranged between 1 per cent and 3 per cent in CBD owing to a supply shortage. The vacancy rate in rest of the city have decreased to levels below 5 per cent. The micromarket of Whitefield, however, is an exception, excess supply in the region has resulted in vacancy rates of over 26 per cent.

An estimated fresh supply of 11.8 million square feet is expected to come up in 2007 of which 3.29 million square feet is already pre-committed.

In Bangalore, IT/ITeS remains the key demand driver accounting for over 70 per cent of the total absorption in the region. Total office absorption in the first quarter 2007 was reported at 1.81 million sft as against 2 million sft during the same period last year.

Only about 0.5 million sft of new office space will be contributed from CBD and Off CBD area with buildings like Gesco Projects (1.8 lakh sft) and Salarpuria Windsor (134,346 sft). Other major developments include Vrindavan Tech Village (8.7 lakh sft), Salarpuria Softzone (789,608 sft) in PBD and Bagmane Laurel (707,230 sft) in SBD.

CBD and SBD are expected to continue their upward movement in rentals with limited supply in the pipeline. The rentals are expected to fall further in the Whitefield area due to a huge supply pipeline of fresh stock, estimated at 2.2 million sft.

With Bangalore International Airport at Devanahalli scheduled to be completed in 2008 in North Bangalore, significant development is expected to come up in this area. However, the CBD, off-CBD and the SBD areas would continue to attract companies due to their proximity to the city centre.