The Central Business District (CBD) of MG Road,Richmond Road, Residency Road and Lavelle Road witnessed an increase in number of enquiries from corporate houses preferring to expand within the CBD.While the micro market did not witness infusion of any new supply, a large number of mid-sized transactions were finalized with total absorption recorded at around 0.18 million sq ft (primarily in second generation space).
Additionally, due to increase in demand and limited availability of Grade A supply or expected to be made available during the current year, rental values increased by almost 15% on a q-o-q basis.With no fresh supply infused or likely to be infused in the Extended Business District (EBD) of Indira Nagar, Koramangala, Old Madras Road, CV Raman Nagar in the near term, most companies have plans to relocate to peripheral markets of Outer Ring Road (ORR) and Whitefield for furthering their expansion and consolidation plans. Absorption was recorded at 0.25 million sq ft. Lack of Grade A supply in the EBD has led to increase in rental values by almost 9% on a q-o-q basis, predominantly in the second generation office space.
Lack of supply in the South Bangalore micro market of Bannergatta Raod, JP Nagar, Jayanagar and Mysore Road continued to pose as a deterrent for occupiers planning to set up their operations in thislocation. Office space development in this micro market is limited to Grade B buildings with no new supply of Grade A space expected in the near future.Absorption was recorded at around 0.12 million sq ft;rental values appreciated by almost 14% on a q-o-q basis.
The Peripheral Business District (PBD) of Outer Ring Road (ORR), Whitefield, Electronic City and North Bangalore is a preferred destination for occupants looking to execute consolidation and/or expansion plans in Grade A projects. Almost 1.6 million sq ft of fresh IT space was released into this market. The Outer Ring Road (ORR) market witnessed absorption of almost 0.62 million sq ft. As most of the projects that are nearing completion or are under construction have registered healthy precommitments on the ORR stretch, quoted rentals have witnessed an upward movement in the range of 4-5% and are expected to continue to increase in the coming quarters as well.
Due to ready availability of quality space, Whitefield continued to remain the favored destination for long term commitments by corporate houses. The micro market witnessed closure of a few mid-sized transactions with absorption estimated at around 70,000 sq ft during the first quarter of 2011.
Electronic City and Hosur Road witnessed only marginal leasing activity during the first quarter.
The North Bangalore micro market is amongst the most preferred destinations for corporate occupiers, however it suffers from lack of quality space which hampers leasing activity in this micro market. High demand amidst low supply scenario led to an increase in rental values by almost 14% q-o-q.
Market Outlook
The outlook for the market remains upbeat for the coming few quarters. Rental values are expected to maintain an upward trend due to increase in demand and lack of availability of quality space in the prime city. The suburbs are also expected to witness an increase in transaction volume with proposed expansion by various corporate occupiers opting for more cost effective suburban Grade A space.
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