Bangalore office leasing market to witness the strongest quarter: JLL

The leasing market in Bangalore is set to witness a strong revival, with absorption by the end of 2021 set to touch approximately 10 million sq ft. This is close to the 2017-2018 absorption levels for the city.

In the last two months (September-October), the city has seen the closure of approximately 3 million sq. ft, the highest in 2021. Bangalore continues to dominate with the most increased leasing activity in the country with overall absorption of 7.2 million sq. feet a year to date, mentioned JLL in its latest report.

According to industry experts and developers, a strong supply pipeline, flexible deal structuring, return to work, along strong revival in market sentiment and will continue to strengthen the momentum of office leasing space in the city.

“An increased activity from startups in the city has been observed, and these businesses are driving the demand for agile workspaces. Out of the 73 unicorns in India, 33 have been founded and are headquartered in the city. Most of them have expanded or optimised their real estate footprint in the city as employees return to offices in a phased manner,” said Rahul Arora, Managing Director - Bangalore & Head - Office Leasing Advisory, India JLL.

The city with a total workforce of 3 million sq. ft is expected to witness a return of one million employees phased return to office by the first half of 2022.

“There has certainly been more than reasonable activity last quarter … primarily as a large number of renewals were in the market and a new start-up segment that has helped propel space take-up,” said Juggy Marwaha CEO, Prestige Office Ventures. Prestige is adding 40 million over the next few years across India.

Managed office players continue to be significant absorbers of space, witnessed an absorption of ~1 million sq. feet. Peripheral markets like Whitefield, Hosur Road & Electronic City seeing renewed interest owing to metro lines nearing completion, improved support infrastructure & lower top-line rentals.

“While the pandemic was a setback to the industry, the demand has picked up over the last few months. If the industry continues to grow at this trajectory, we will further ramp up our growth strategy with the hope that the office absorption level will bounce back to pre-covid levels by 2022,” said Sanjay Chatrath, Managing Partner India at Incuspaze.

Leasing momentum continues to strengthen with several new Request for Proposals (RFPs) at an all-time high of 12 million sq. ft across various micro-markets, which is expected to pressure rentals in the next 3-4 quarters, mentioned JLL. Occupiers continue to explore renewal of existing leases by offering lock-in periods, given the confidence of return to the office

Transaction volumes have been inversely correlated with the perceived intensity of the pandemic. Market activity peaked in Q4 2020, as new COVID-19 cases trended lower and the near-term visibility of a viable vaccine increased. Similarly, the second wave of infections impacted transacted volumes during the second quarter of 2021, and the current recovery reflects the comparatively easing of the impact of the pandemic.