Office space market booming

Office space market booming
The demand for commercial space in both the northern and eastern parts of the city is growing
The Times of India

The office space spectrum between Bangalore north and east is looking bright. The movement of companies into these regions has picked momentum due to high absorption rates. While Whitefield remains a hotspot for office space, the northern region will see a lot of developments in the coming days with the work on the international airport happening 24/7. The cumulative office space absorption in the first half of the year has crossed the 7-million sqft mark and transaction volume in all the micro markets will cross the 14-million sqft mark by the end of 2005.

The northern belt, mainly the Yelahanka Road, to a large extent till recently was dotted with small and medium industries, and pharmaceutical companies. However, in the recent years, software companies have located here. It may also be noted here that the State Government has planned a 1,500-acre hardware park near Devanahalli and an apparel park near Doddaballapur. With the KIADB in the process of acquiring land for these setups, much is about to follow soon. Industry sources reveal that in the background of Devanahalli international airport project taking off, the show has just begun. While land transactions is recorded highest here, developers are ready with major plans to put up massive office spaces as absorption rates predicted here are high.

Meanwhile, Whitefield has emerged as one of the major Peripheral Business Districts (PBD) of Bangalore. Driven by the large office spaces currently under development and in the planning stages in Whitefield, dependent real estate uses such as residential, retail and entertainment are also being planned in large volumes in this market. The emerging social infrastructure being created in Whitefield will help the already large transient population of knowledge professionals working there. By the end of the next quarter, around 23 lakh sqft of office space will be ready for occupation.

Apart from the high volume of ready-built high-grade office space supply coming up in Whitefield, there is also a trend of large multinational technology firms who have reached a critical size in Bangalore sourcing and purchasing land in the area to develop their own campuses. One of the recent instances of a multinational software services firm purchasing a land parcel for a campus development in Whitefield is Hewlett Packard, which has acquired 16 acres. HP joins an increasing number who already own campuses in Whitefield - notable among them being GE (Technology Centre), SAP and Dell. Some large built-to-suit (BTS) and land acquisition transactions of other software services companies are also ongoing and are expected to be complete by the end of the third quarter of the year.

Absorption of office space in Whitefield exceeded 1.3 million sqft in 2004 and has already touched eight lakh sqft in the first six months of 2005 pointing to a strong occupier sentiment on expansion plans in the business district. Rental values in Whitefield for 'office properties of Grade A' are in the range of Rs 25-28 per sqft per month. The highest rental values continue to be in the International Technology Park ranging from Rs 43 to 45 per sqft per month.

Land values of commercial use land parcels in and around the three main roads of Whitefield Road, Brookefield Road and Joy Factory Road have witnessed a sharp escalation between the first quarters of 2004 and 2005. While capital values of large land parcels (over 10 acres) are in the range of Rs 800-1050 per sqft, capital values of smaller land parcels, below five acres, with frontage or close to the main roads is reportedly in the range of Rs 1,300-1,700 per sqft.