IT/ITeS leads Bangalore's office realty race

Bangalore continues to lead other cities in office space absorption. In fiscal 2012, Bangalore had the highest office space absorption in the country, according to a report from real estate research firm Knight Frank India.

Despite the prevailing global economic uncertainties, the city’s office market clocked absorption of almost 12 million sq ft in fiscal 2012, translating into an increase of around 10 per cent over 2011.

The report, ‘July 2012 Office Traction @ Glance’, states that the level of absorption can be attributed to revived interest which resulted in office space absorption of 6.75 million sq ft in the first half of the fiscal, while the second half witnessed a moderate 5.25 million sq ft.

As always, the IT/ITeS sector has been responsible for the maximum office space absorption in Bangalore. The first half of fiscal 2012 saw the sector taking up 74 per cent of total available office space, while the latter half accounted for 70 per cent.

With Bangalore becoming a hub for IT and related services, the hunt for suitable office space is constantly on the rise, the report noted.

“In the last many years, one of Bangalore’s most important businesses has been IT. With many companies from this sector, both domestic and foreign, already having set up shop here, many more may make inroads,” Knight Frank India Regional Director (South) Naresh Dandapat said.

Mantri Developers Chairman Sushil Mantri had said at a real estate conference held in Bangalore last week that South India has been witnessing high office space growth. With Bangalore expanding with a growing population, more jobs (and real estate) may be required,” adding that even during recession, Bangalore created 10 to 11 million jobs.

Dandapat added that the first quarter of fiscal 2013 had witnessed year-on-year growth of 8 per cent in office space absorption in Bangalore, mainly due to IT. With an inventory of around 90 million sq ft of office space, Bangalore remains one of the most preferred office space destinations in the country.

Demand for smaller space

But due to dearth of quality space in central locations and a few suburban micro-markets, companies tend to explore peripheral markets like Electronic City, Whitefield and Outer Ring Road which have seen considerable supply of new office space.

“It is noteworthy to mention that demand for smaller spaces in the range of 40,000-60,000 sq ft outweighs demand for larger spaces. We have also found sufficient demand for small office spaces in the range of 2,000-3,000 sq ft in prime office space buildings developed by reputed builders,” Brigade Group Vice-President (Sales) Viswaprathap Desu said.

Realty major Brigade Group tied up with clients for over 1.3 million sq ft of space last year, predominantly in the World Trade Center at Brigade Gateway and Summit at Brigade Metropolis. Amazon, Volvo, E&Y, KPMG, Cap Gemini, Samsung, Siemens, Toyota and Arthur J Gallagher are some of the firms that its properties house.

Non-IT sector space

Significantly, a lot of pattern variation has been witnessed in the case of non-IT companies which took up office space in the first half of fiscal 2012 with those taking up space in the second half. The manufacturing sector took a quantum leap with its share of absorption jumping from a mere 4 per cent in H1 FY 2012 to 13 per cent in H2 FY 2012, the report said.