RESILIENT DEMAND
Bangalore’s commercial market exhibited resilience with comparatively high demand levels despite the discomfort in the market on account of global uncertainties. Demand for commercial office space reached approximately 3.55 million square feet (sf) during the fourth quarter of 2011 taking the year’s total to approximately 14.78 msf. Quite a few significant big ticket deals were observed to have been closed during the quarter. However, demand for space in the range of 3,000 sf to 20,000 sf was dominant and comprising almost 60% of the number of deals closed during the quarter.The developers/landlords refrained from escalating the rentals in spite of the decreasing vacancy levels across the city in order to retain and capitalize on the enquiries. This further accentuated the pace of deal closures thereby ensuring better absorptions. A marginal escalation in the rentals in the Outer Ring Road (ORR) micro market was observed in view of the low space availabilities corresponding to the strong demand.
SUPPLY SYNCHRONIZING VACANCIES
The supply infusion which remained subdued during the first half of 2011; recuperated during the last two quarters, with supply recording its highest at approximately 2.33 msf during the fourth quarter. The overall supply in 2011 totalled approximately 4.18 msf. The subdued amount during the first two quarters of 2011 coupled with high absorption levels substantially domesticated the vacancy levels in the city (bringing it down from 16.6% in the fourth quarter of 2010 to 12.0% by the fourth quarter of 2011).In spite of the infusion of supply in the SEZ segment during the quarter, the overall vacancy in SEZ developments remained considerably low at about 2.3%. The ORR micro market was characterized by low space availabilities and as a consequence most of the transactions recorded were of comparatively smaller dimensions barring the take up in a pre-committed space. Suburban markets witnessed most of the transactions in the range of 10,000 sf to 40,000 sf. The Whitefield micro market thereby gained leading to increased take-ups and a subsequent reduction in the vacancy level.Moreover, in view of the availability of a larger space in the micro market, most of the large sized transactions were recorded in Whitefield.
OUTLOOK
During the first two quarters of 2012, on account of the spill over of deal closures from end of 2011, the absorption levels will remain on the higher side. Vacancy too is expected to come down marginally or remain stable. Marginal scarcity of space options will prevail in early 2012; however, the situation is likely to improve as approximately11 msf of new supply is expected to enter the market in 2012
Bangalore’s commercial market exhibited resilience with comparatively high demand levels despite the discomfort in the market on account of global uncertainties. Demand for commercial office space reached approximately 3.55 million square feet (sf) during the fourth quarter of 2011 taking the year’s total to approximately 14.78 msf. Quite a few significant big ticket deals were observed to have been closed during the quarter. However, demand for space in the range of 3,000 sf to 20,000 sf was dominant and comprising almost 60% of the number of deals closed during the quarter.The developers/landlords refrained from escalating the rentals in spite of the decreasing vacancy levels across the city in order to retain and capitalize on the enquiries. This further accentuated the pace of deal closures thereby ensuring better absorptions. A marginal escalation in the rentals in the Outer Ring Road (ORR) micro market was observed in view of the low space availabilities corresponding to the strong demand.
SUPPLY SYNCHRONIZING VACANCIES
The supply infusion which remained subdued during the first half of 2011; recuperated during the last two quarters, with supply recording its highest at approximately 2.33 msf during the fourth quarter. The overall supply in 2011 totalled approximately 4.18 msf. The subdued amount during the first two quarters of 2011 coupled with high absorption levels substantially domesticated the vacancy levels in the city (bringing it down from 16.6% in the fourth quarter of 2010 to 12.0% by the fourth quarter of 2011).In spite of the infusion of supply in the SEZ segment during the quarter, the overall vacancy in SEZ developments remained considerably low at about 2.3%. The ORR micro market was characterized by low space availabilities and as a consequence most of the transactions recorded were of comparatively smaller dimensions barring the take up in a pre-committed space. Suburban markets witnessed most of the transactions in the range of 10,000 sf to 40,000 sf. The Whitefield micro market thereby gained leading to increased take-ups and a subsequent reduction in the vacancy level.Moreover, in view of the availability of a larger space in the micro market, most of the large sized transactions were recorded in Whitefield.
OUTLOOK
During the first two quarters of 2012, on account of the spill over of deal closures from end of 2011, the absorption levels will remain on the higher side. Vacancy too is expected to come down marginally or remain stable. Marginal scarcity of space options will prevail in early 2012; however, the situation is likely to improve as approximately11 msf of new supply is expected to enter the market in 2012
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