Bangalore Office Real Estate: JLL REIS** Report
Bangalore: Office Space
* Demand from the IT and ITeS sector continues to strengthen leasing in JLL REIS
* Rents remain stable in the CBD & increase in other sub-markets
* Capital values increase marginally in the SBD & Whitefield sub-markets
Demand..!
Bangalore continued to see healthy transaction activity in 3Q 2011, especially in the large office formats. A total transaction volume of neraly 18 lakh sq. ft (1,67,225 sq. meter) was recorded in the September quarter, 2011.
The combination of stable demand and restricted supply has been instrumental in bringing the Bangalore’s overall vacancy rate down to 12.7% in 3Q 2011 from 13.5% in 2Q2 011. Vacancy rates across the SEZs (Special Economic Zones ) also fell significantly to below 1% in the September quarter.
Whitefield witnessed stronger leasing activity than the other sub-markets, with examples of leasing deals there including HUL’s lease of 4,00,416 sq. ft (37,200 sq. meter) in Prestige Shantiniketan and the lease by Airbus of 1,20,000 sq. ft (11,148 sq. meter) in Xylem.
In the SBD, Broadcom leased 2,60,000 sq. ft (24,154 sq. meter) in RMZ Ecospace and NetApp leased 1,12,029 sq. ft (10,407sq. meter) in Embassy Golf Links. Leasing deals in the CBD included Zunga Gaming’s lease of 31,000 sq. ft (2,880 sq. meter) in Bible House and Toyota Financial Services’ lease of 25,596 sq. ft (2,378 sq. meter) in Vaswani Centropolis.
Supply Side..!
A total of 12 lakh sq. ft (1,11,484 sq. meter )of office space commenced operation in 3Q 2011, including ITPL Society General Block, JP IT Park,Kalyani Platina Phase 2, Bagmane World Trade Center 3 Phase 2 Block A, Bagmane World Trade Center 3 Phase 2 Block B & Prestige Atrium.
All these projects, except JP IT Park in Electronics City, completed with an occupancy rate of above 90%.
Asset Performance..!
In 3Q 2011, average rents for office space in the CBD and Electronics City remained stable due mainly to stable BFSI sector demand in the former sub-market and low overall demand in the latter.
In the SBD, rents rise by 2.3% qoq due to the limited supply and increased demand from IT occupiers as this sub-market is closer to the city’s residential catchment areas. The Whitefield sub-market also saw a qoq increase in rents, up 3.3% in 3Q 2011.
Capital values in the CBD remained stable, while those in the SBD and Whitefield rise up 2.3% q-o-q in the SBD, which is an increase of 19.7% over the last trough in 3Q 2010, and up 3.8% qoq, in Whitefield, an rise of some 15% over the trough in 4Q 2010. High occupancy rates due to growing demand resulted in the increase in capital values in these sub-markets, although neither sub-market saw any sale transactions in 3Q 2011.
One Year Outlook..!
With many IT companies now looking to pre-lease office space to take advantage of favourable commercial terms proposed by the developers, Bangalore is expected to see stable demand over the remainder of the year (2011), particularly in the Whitefield and SBD sub-markets.
Good pre-leasing in upcoming projects in the SBD, along with expected demand for space in completed and upcoming projects in Whitefield, will drive net absorption by end-2011. Rents and capital values are likely to rise across the sub-markets, while yields are expected to remain stable or compress in 2011 due to the perceived lower risk.
The CBD and SBD sub-markets are predicted to favour landlords over the remainder of 2011 due to growing demand and limited supply, whereas the Whitefield and Electronics City sub-markets will likely favour tenants in 2012.
** Real Estate Intelligence Service, Jones Lang LaSalle
Bangalore: Office Space
* Demand from the IT and ITeS sector continues to strengthen leasing in JLL REIS
* Rents remain stable in the CBD & increase in other sub-markets
Demand..!
Bangalore continued to see healthy transaction activity in 3Q 2011, especially in the large office formats. A total transaction volume of neraly 18 lakh sq. ft (1,67,225 sq. meter) was recorded in the September quarter, 2011.
The combination of stable demand and restricted supply has been instrumental in bringing the Bangalore’s overall vacancy rate down to 12.7% in 3Q 2011 from 13.5% in 2Q2 011. Vacancy rates across the SEZs (Special Economic Zones ) also fell significantly to below 1% in the September quarter.
Whitefield witnessed stronger leasing activity than the other sub-markets, with examples of leasing deals there including HUL’s lease of 4,00,416 sq. ft (37,200 sq. meter) in Prestige Shantiniketan and the lease by Airbus of 1,20,000 sq. ft (11,148 sq. meter) in Xylem.
In the SBD, Broadcom leased 2,60,000 sq. ft (24,154 sq. meter) in RMZ Ecospace and NetApp leased 1,12,029 sq. ft (10,407sq. meter) in Embassy Golf Links. Leasing deals in the CBD included Zunga Gaming’s lease of 31,000 sq. ft (2,880 sq. meter) in Bible House and Toyota Financial Services’ lease of 25,596 sq. ft (2,378 sq. meter) in Vaswani Centropolis.
Supply Side..!
A total of 12 lakh sq. ft (1,11,484 sq. meter )of office space commenced operation in 3Q 2011, including ITPL Society General Block, JP IT Park,Kalyani Platina Phase 2, Bagmane World Trade Center 3 Phase 2 Block A, Bagmane World Trade Center 3 Phase 2 Block B & Prestige Atrium.
All these projects, except JP IT Park in Electronics City, completed with an occupancy rate of above 90%.
Asset Performance..!
In 3Q 2011, average rents for office space in the CBD and Electronics City remained stable due mainly to stable BFSI sector demand in the former sub-market and low overall demand in the latter.
In the SBD, rents rise by 2.3% qoq due to the limited supply and increased demand from IT occupiers as this sub-market is closer to the city’s residential catchment areas. The Whitefield sub-market also saw a qoq increase in rents, up 3.3% in 3Q 2011.
Capital values in the CBD remained stable, while those in the SBD and Whitefield rise up 2.3% q-o-q in the SBD, which is an increase of 19.7% over the last trough in 3Q 2010, and up 3.8% qoq, in Whitefield, an rise of some 15% over the trough in 4Q 2010. High occupancy rates due to growing demand resulted in the increase in capital values in these sub-markets, although neither sub-market saw any sale transactions in 3Q 2011.
One Year Outlook..!
With many IT companies now looking to pre-lease office space to take advantage of favourable commercial terms proposed by the developers, Bangalore is expected to see stable demand over the remainder of the year (2011), particularly in the Whitefield and SBD sub-markets.
Good pre-leasing in upcoming projects in the SBD, along with expected demand for space in completed and upcoming projects in Whitefield, will drive net absorption by end-2011. Rents and capital values are likely to rise across the sub-markets, while yields are expected to remain stable or compress in 2011 due to the perceived lower risk.
The CBD and SBD sub-markets are predicted to favour landlords over the remainder of 2011 due to growing demand and limited supply, whereas the Whitefield and Electronics City sub-markets will likely favour tenants in 2012.
** Real Estate Intelligence Service, Jones Lang LaSalle
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Jones Lang LaSalle
Level 9 Tower A, Global Business Park,
Sector 26 Mehrauli Gurgaon Road
Gurgaon Haryana 122 002
+91 124 460 5000
+91 124 460 5001
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