The following is the report by Ashutosh Limaye – National Director, Research, JLL India
From a few quarters ago, corporate occupiers in India have been staring at a severe supply crunch of ‘right product-right place’ grade-A commercial realty. In such a scenario, a ray of hope is being provided by a few developers in Bengaluru, who have completed some of their office projects a couple of quarters prior to the original deadlines.
This is most probably due to these developers taking note of the existing situation in the sector, especially on the back of strong pre-commitments and demand for office space. Three projects located along Lavelle Road and Sarjapur Road are partly operational and ready for fit-outs from 4Q15 beating their original completion schedule by 2-3 quarters. In the next few quarters, more under-construction projects are expected to follow suit as more developers could start aiming for faster completion of their commercial projects given the strong absorption trends in Bengaluru.
Showing faith in India’s economic growth, corporate occupiers have been in expansionary mode, especially in major cities. So high is the demand for quality commercial spaces in the city that 2015 proved to be a historic year as demand overtook supply. Vacancy has been steadily going down. Riding on the back of reducing supply and lowering vacancy, rents have also been rising in grade-A properties across cities. Even Grade-B buildings in good locations would see more leasing activity in this scenario.
In Bengaluru, vacancy is a mere 4-5% across its office space of more than 90 million sft. In 2015, more than 10 mn sft of office space got occupied and another 2 mn sft of leasing was done in under-construction projects. Although there is demand for 10 mn sft, supply of only 8-8.5 mn sft non-captive office space is expected to come up in 2016. Developers in Bangalore are known to be nimble footed and we may see more “ahead of time” completions of office projects in near future to meet strong demand the city demonstrates.
The projects at a glance:
· RGA Tech Park
· 909 Lavelle
· Global Village Technology Park Phase 3 Tower 6
· Global Technology Park Tower A & Tower B.