Bengaluru's Whitefield to see 8-10% growth in office rental: Report

Business hub that hosts famed companies will gain from metro connectivity, it says

Office space renting in Bengaluru’s Whitefield, which hosts several famous companies, is likely to increase 8-10 per cent in the next two years after the metro becomes fully operational there later in 2023, said a report on Thursday.

Whitefield, the second largest office market in Bengaluru after Outer Ring Road, has a stock of about 40.4 million square feet and vacancy here is at around 17.2 per cent in the fourth quarter of the calendar year 2022, said the report by Colliers.

The Whitefield metro, which became partially operational in March, will boost business activity by improving accessibility and reducing commute time to a place where Capgemini, Cognizant, Koch Industries, TCS, HCL and Mercedes-Benz have their offices. Rental growth will also depend upon the overall demand and macroeconomic factors.

 

“Metro's enhanced connectivity can foster the growth of offices in key locations. Improved connectivity, such as efficient and reliable public transportation options, can attract more businesses to set up offices in previously inaccessible or inconvenient to reach," said Arpit Mehrotra, managing director, office services--South India & Head of Flex India.

The Colliers report tracked the progress in constructing the metro at different stages and its impact on commercial offices. It said the average annual supply of office space in Whitefield increased 10 per cent in CY17-22, as the construction of metro project began and when compared to CY11-16.

"Gross leasing in Whitefield rose 18 per cent during the metro construction stage (CY17-22) compared to the planning stage (CY11-16)," it said, describing Bengaluru as a central business district (CBD).

“Bengaluru CBD has undergone a transformation through building upgradations, redevelopments and change in land uses since the metro work commenced. This has spurred occupier activity in the area, leading to a 79% increase in leasing during CY17-22 as compared to the preceding 6-year period," said Vimal Nadar, senior director and head of research, Colliers India.

The CBD market now has low vacancy levels at 3.2 per cent despite increased supply, indicating occupiers’ need to be centrally located with superior connectivity. Metro project has transformed the office market of CBD and will positively impact the Whitefield market as well in the next 2-3 years, said Nadar.

While demand for flexible office space has skyrocketed in the city over the year, Whitefield saw little expansion in due to its limited connectivity with other parts of the city. In 2022, while flex space contributed to 13 per cent of the total leasing of the city, it accounted for only 2 per cent of the total leasing in Whitefield.

“Overall, improved connectivity can create a virtuous cycle of economic growth, where more businesses set up offices in key locations, leading to more job opportunities and a more robust local economy,” said Mehrotra.