Bengaluru has gained the epithet of being the foremost office destination in the country. The fact that it is one of the fastest growing metropolitan regions in the country, along with the added advantages of a salubrious climate, a vibrant cosmopolitan population, and a growing knowledge economy, provides the city with an edge over other key Indian cities.
Half-Year (H1 2022) observations
Bengaluru saw the first half of the year clock an impressive 7.7 million sq.ft of office absorption, surpassing the quantum observed in H1 2021 by 67%.
The ORR office market, touted to be most preferred by the IT/ITeS sector, continued to lead occupier demand, accounting for 42% share in H1 2022.
An interesting trend seen was regarding the managed offices/co-working segment operators. While the segment went through considerable apprehensions during the initial pandemic period, with most tenants requesting for rent waivers or renegotiations on their term agreements, it picked up pace in H2 2021 with the opening up of offices and saw its share in absorption pegged at 24% in H1 2022.
Second Quarter (Q2 2022) observations
The total office space absorption in Bengaluru was recorded at 4.2 million sq.ft in Q2 2022, depicting a YoY growth of 133%. When compared to the previous quarter, the growth in absorption was recorded at 20%.
This substantial YoY increase in absorption growth in Q2 2022 can largely be attributed to the severity of the second wave of the pandemic during Q2 2021 that took a toll on real estate activities as well, leading to demand shrinking considerably in the city’s office market.
Meanewhile, new completions continued their onward momentum, and was recorded at 2.9 million sq.ft in Q2 2022, totaling up to 5.9 million sq.ft in the first six months of the year.
On weighted average rental front, Bengaluru saw an uptick in rental values in Q2 2022 vis-à-vis the values in Q2 2021, to the tune of 5%.
Given the market traction witnessed in H1 2022, Bengaluru office market holds good potential to regain its momentum that was witnessed in the pre-pandemic era, and while the pandemic continues to make its presence felt, the strong fundamentals ruling the market will prove resilient enough.
