The office leasing market in Bengaluru is set to witness a strong revival with absorption by the end of 2021 set to touch around 10 million sq. feet. Absorption is a method by which commercial real estate investors assess tenant demand and is measured in square footage. It refers to the amount of space that tenants in a specific geographic area physically moved into during a specific period.
In the last two months (September-October), the city has seen closure of approximately 3 million sq. ft, highest in 2021, according to a report by real estate firm JLL. Bengaluru continues to dominate with the highest leasing activity in the country with overall absorption of ~7.2 million sq. feet year-to-date. The reasons for this include a strong supply pipeline coupled with return to work along with a strong revival in market sentiment, the report states. The city with a total workforce of ~3 million is expected to witness a return of ~1 million employees to the office in a phased manner by the first half of 2022.
As per the report, Outer Ring Road (ORR) continues to witness the highest absorption in the city of approximately 2.8 million sq. ft out of the 7.2 million sq. ft. Close to 7,000 seats have been leased out of the 17,000 seats. Managed office players continue to be significant absorbers of space, witnessing an absorption of ~1 million sq. feet. Peripheral markets like Whitefield, Hosur Road and Electronic City are witnessing renewed interest owing to metro lines nearing completion, improved support infrastructure and lower top line rentals, the report adds.
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. RFPs spell out the aspects of the deal that are important to a tenant in the 'explorationâ€™ stage of lease negotiations.
â€śAn increased activity from start-ups 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 in 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,â€ť said Rahul Arora, Managing Director - Bangalore & Head - Office Leasing Advisory, India, JLL.