Emerging Office Space Destinations
With the pick-up in the economy, the commercial property segment too is experiencing a gradual
, yet marked increase in demand for office space, especially in Bangalore. Since the beginning of 2010, we have seen a movement in the real estate sector, including the office segment. There is an improvement in transaction velocity as well, especially in places like Bangalore and Mumbai, where financial institutions and the IT sector have regained some confidence and this has led to improved take-up of space in these cities.Favored destinations:
Central Business District (CBD)
A CBRE report points out that the CBD of M G Road, Richmond Road and Residency Road continues to be the preferred destination for new corporate companies, government agencies and financial institutions. Absorption was estimated at approximately 2.8 lakh sqft. While rentals appreciated by approximately three percent, capital values rose by around six percent at the end of the second quarter.
Peripheral Business Districts (PBDs)
Though the PBDs of Outer Ring Road (ORR), Whitefield, Electronic City and North Bangalore have an oversupply, this micro market is still being considered a favored destination for occupiers considering longterm expansions, states the CBRE report. The ORR stretch between K R Puram Junction and Sarjapur Road witnessed appreciable increase in leasing activity, and absorption in the last quarter was estimated at approximately 2.1 lakh sqft.
The Whitefield micro market witnessed substantial leasing interest and approximately seven lakh sqft was taken up. "This kind of absorption has taken place around the EPIP zone and about 15-20 lakh sqft of supply is expected to be in the market by the end of this year as many projects will be completed.
Secondary Business District (SBD) areas
Even the non-CBD areas of Indiranagar, Koramangala, Old Madras Road and CV Raman Nagar saw hectic leasing activity reflecting the overall buoyant mood of the real estate market. Approximately three lakh sqft of space was absorbed and the fresh supply was estimated at 1.5 lakh sqft.
Apart from ready availability of Grade A space and softer rentals, compared to the CBD, this micro market has other factors such as improving infrastructure and better connectivity to the city centre that are making it a favoured destination for corporates.
Projected supply and demand
According to an analytical report on seven metropolitan cities from JLLM, in association with Real Estate Intelligence Services (REIS) India, by end-2010, Bangalore will be in second position, after Mumbai, in terms of operational office stock in the country.
A Cushman & Wakefield research report states that the projected supply for the third quarter of 2010 is approximately 42.2 lakh sqft, spread across suburban (26 percent) and peripheral (64 percent) locations. Leasing activities are expected to gain momentum during the second half of 2010 with some corporate firms consolidating their expansion plans. The absorption of office space in the first quarter of 2010 along the Hebbal-ORR was 30,000 sqft. "Along the Marathahalli-Sarjapur Road ORR belt, around 15 lakh sqft of commercial space was absorbed in the first quarter of this year.
Emerging Office Space Destinations
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