Office space leasing falls by 25 pc in City

Growth has been only around outer ring road

 The economic slowdown is impacting leasing of office space in Bangalore. Leasing has fallen in Bangalore by an average 25 per cent between July and September, compared to the previous three months, according to studies undertaken by real estate consultancies DTZ and Cushman and Wakefield.

Leasing activity, in general, in the entire year till September 2013 has fallen countrywide also, by around 25 per cent compared to 2012. Bangalore saw absorption of 2.9 million sqft between July and September, while between March and June, absorption was around 3.6 million sqft.

The March to June period saw leasing by major IT companies, while deals and leasing have been deferred between July and September. Real estate analysts put down the deferment to depressing market conditions, slowdown in demand for office space, regulatory issues, and in part to tight financial conditions among developers. The elections in 2014 will also impact supply and demand, analysts say.

Despite this general slowdown in 2013, compared to 2012 countrywide, Bangalore continues to lead major metros in the country in the total volume of space leased out between July and September - at almost 40 per cent of the total 7 million square feet leased out in top seven cities, according to the study by the real estate consultancies.

In the next five years, Bangalore is expected to lead the country absorbing nearly 32 million square feet, well ahead of Mumbai which may absorb 24 million square feet and the National Capital Region of Delhi 23 million square feet.

Whatever growth is happening in Bangalore is in the Sarjapur-Marathhalli-Whitefield segment, followed by Hebbal region, which comparatively has less number of IT companies than the Sarjapur-Whitefield belt.

The growth in this belt is high owing to the initial establishment of Electronic City close to Sarjapur and the International Technology Park in Whitefield, around which most IT companies sprang up. Researchers point out that more than 50 per cent of Bangalore’s demand for office space comes from the IT sector, which has over 1,500 companies.

 North Bangalore has one major office set-up in Manyata Tech Park on the ring road near Hebbal. Surprisingly, that has not prompted IT companies to set up shop in the region.Because it is connected to Whitefield via the ring road, Hebbal region and North Bangalore, in general, are well poised to grow.

There is a sense of disappointment over the airport at Devanahalli not prompting companies to set up operations in North Bangalore. West Bangalore near Mysore Road and Kengeri and the areas close to South West like Banashankari have not shown any growth in office space beyond traditional factories and industrial units that have set up shop there. 

The Global Tech Village off Nice Road is the only major IT presence in South West Bangalore. Toyota Motors, which has its unit on Mysore Road, is the major industrial landmark in the area.

Clearly, there’s a lot of work to be done to attract offices to North and West Bangalore. North is better placed than West, owing to better connectivity to the traditional IT region of Sarjapur and Whitefield. The West requires a connecting corridor through the central parts of the city to East Bangalore and the Metrorail project may just be the answer.

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