MARKETBEAT

OFFICE SNAPSHOT
BENGALURU, INDIA

Q2 2015

A Cushman & Wakefield Research Publication

Cushman & Wakefield (India) Pvt. Ltd

4th Floor, Pine Valley
Embassy Golf Link Business Park
Intermediate Ring Road, Bengaluru 560 071
www.cushmanwakefield.co.in

Q2 2015

Overall Vacancy

11.4%

8.5%

Y-O-Y
CHANGE
-2.9%*

Weighted Average Net

Asking Rents (INR/sf/month)
YTD Net Absorption (sf)

49.01

50.09

2.2%

2,641,900

6,514,900

146.6%

12 MONTH
FORECAST

* percentage points

NET ASKING RENTAL VS. VACANCY RATES (GRADE A)

55

50%

50

40%

45

30%

40

20%

35

10%

30
25

0%
2010

2011

2012

2013

2014

NET ASKING RENTAL RATE

Q1
2015

Q2
2015

VACANCY RATE

PRE-COMMITMENT VS. NET ABSORPTION (GRADE A)

10,000
8,000
6,000

1,885
6,514

2,000

5,292
9,418

4,000

2,136
4,449

Rentals declined in select submarkets; increase in vacancy. The

Peripheral South locations noted a 6% decline in the weighted average
rentals due to limited absorption amidst increased supply. The availability of
space in buildings and hence comparatively lower rentals in the Suburban
East submarket led to a 13% dip in the weighted average Grade A rentals.
However, due to sustained demand and newer buildings quoting higher
rentals, Grade A weighted average rentals in the Outer Ring Road
submarket witnessed a 2% increase. In spite of healthy leasing, Grade A
vacancy increased by 0.5 percentage point and stood at 8.5% due to an
influx of new supply.

Q2 2014

3,227

Rise in leasing activity. Overall leasing activity registered a 17% increase

and was noted at 4.6 msf this quarter. The submarkets, namely, Outer Ring
Road and Peripheral East dominated the Grade A leasing activity with a 41%
and 22% share respectively. Further, net absorption in Grade A
developments was recorded at 3.2 msf, a 3% decline on account of
increased relocations. The majority of demand this quarter was led by the
IT-ITeS sector that accounted for nearly 76% of the total transactions,
followed by BFSI (8%). Given the limited availability of space in Grade A
developments, pre-commitments were high and were recorded at nearly
1.2 msf this quarter.

STATS ON THE GO (GRADE A)

5,743

Office supply doubled. The second quarter of 2015 witnessed around 4.0
million square feet (msf) of new supply, more than twice that of the
previous quarter. Grade A developments accounted for 97% of the total
supply, out of which nearly 17% was IT-SEZ developments. A majority of
this new Grade A supply (57%) was in the Outer Ring Road submarket,
followed by 26% in the Peripheral South submarket.

Rentals may appreciate in select submarkets. With continued

occupier demand and limited vacancy, the Outer Ring Road and the
Peripheral East submarkets may witness a marginal rental appreciation,
while the other submarkets may see stable rentals.

1,291
9,081

OFFICE MARKET OVERVIEW

Strong supply pipeline; leasing to remain strong. Approximately 3.5

msf of new supply is expected in the next quarter. Continued demand for
quality space is likely to result in robust leasing, especially in the Outer Ring
Road and Peripheral East submarkets, and may lead to stable vacancy levels.

2,007
9,724

The Indian economy is expected to witness a GDP growth rate of

77.5% in FY201516 due to a likely revival in investments on the back of
reforms being introduced by the current government. Lower crude prices
are expected to further benefit the current account deficit, inflation, and
subsidy burden.

OUTLOOK

INR/sf/month

Economic growth maintained momentum.

Gross Domestic Product (GDP) growth rate (as
per the new methodology) for the fourth quarter
of FY201415 was 7.5% while the yearly GDP
growth was recorded at 7.3%0.4 percentage
point higher than last year. This growth was
supported by an expansion in the services and manufacturing sectors. The
financial services sector exhibited a 10.2% increase while the growth of nonfinancial services was noted at 14.1% for the fourth quarter of FY201415.
Further, in comparison to manufacturing production which grew by 8.4%,
this quarter saw a subdued growth of 1.4% in the construction industry.
The Reserve Bank of India, in its bi-monthly monetary policy review in June
2015, further reduced key policy rates by 0.25 percentage point to 7.25%.
Declining food prices led to a dip in retail inflation (measured in terms of
Consumer Price Index), which was recorded at 4.9% in April.

sf (thousands)

ECONOMIC OVERVIEW

2010

2011

2012

2013

2014

YTD 2015

PRE-COMMITMENT

For more information, contact:

Somy Thomas
Executive Director - Consultancy and Valuation &
Advisory, India
Tel: +91-80 4046 5555
somy.thomas@ap.cushwake.com

NET ABSORPTION

This report contains information available to the public and has been relied upon
by Cushman & Wakefield on the basis that it is accurate and complete. Cushman
& Wakefield accepts no responsibility if this should prove not to be the case. No
warranty or representation, express or implied, is made to the accuracy or
completeness of the information contained herein, and same is submitted subject
to errors, omissions, change of price, rental or other conditions, withdrawal
without notice, and to any special listing conditions imposed by our principals.
2015 Cushman & Wakefield, Inc. All rights reserved.

BENGALURU SELECT MICRO MARKET STATISTICS

SUBMARKET

INVENTORY

OVERALL
VACANCY
RATE

YTD LEASING
ACTIVITY

UNDER CONSTRUCTION

YTD CONSTRUCTION
COMPLETIONS

YTD
NET ABSORPTION

WTD. AVG. RENTAL RATE

INR
US$
SF/MONTH*
SF/YR
1Q 15*
2Q 15*
2Q 15*

EURO
SF/YR
2Q 15*

ALL GRADES**
CBD / Off-CBD

10,384,600

13.2%

218,500

829,500

121,000

65.46

65.33

$12.32 10.94

Suburban East

19,004,900

3.2%

1,246,500

1,528,500

755,300

65.96

58.21

$10.98

Suburban South

11,310,900

7.2%

1,497,800

1,175,000

820,000

997,700

61.50

60.44

$11.40 10.12

Peripheral East

29,405,200

14.3%

1,566,200

3,042,400

676,000

1,398,100

37.53

37.41

Peripheral North

1,917,000

56.0%

367,600

2,682,900

453,800

367,600

61.23

61.23

Peripheral South

15,397,200

26.0%

324,500

1,000,000

324,500

39.23

38.97

Outer Ring Road

43,652,200

6.7%

3,158,800

13,738,400

3,006,900

2,926,300

58.96

60.45

$11.40 10.12

132,372,200

11.4%

8,496,400

23,576,600

5,956,700

6,906,700

48.02

48.07

$9.07

3,495,300

11.5%

118,900

494,500

49,100

70.67

70.33

$13.27 11.78

17,698,400

1.9%

1,164,800

1,528,500

682,000

74.30

65.00

$12.26 10.89

Suburban South

4,987,700

4.3%

954,100

850,000

820,000

883,200

58.46

58.46

$11.03

9.79

Peripheral East

21,392,800

11.7%

1,516,200

2,772,400

676,000

1,361,100

38.83

38.78

$7.32

6.50

Peripheral North

1,687,500

55.4%

367,600

2,682,900

453,800

367,600

62.84

62.84

Peripheral South

8,456,800

21.1%

278,000

1,000,000

278,000

43.26

40.56

Outer Ring Road

42,450,400

5.6%

3,110,200

13,416,500

2,886,900

2,877,700

60.03

61.47

$11.60 10.30

101,269,000

8.5%

7,626,300

22,324,800

5,836,700

6,514,900

50.06

50.09

$9.45

TOTALS

$7.06

9.75

6.27

$11.55 10.25
$7.35

6.53

8.05

GRADE A
CBD / Off-CBD
Suburban East

TOTALS

$11.85 10.52
$7.65

6.79

8.39

* Reflect weighted average, warm shell, asking rental rates for vacant properties that provide core facility, high-side air conditioning and 100% power back-up
** All Grades - includes all Grade A and select properties of other grades in prime office micro markets
*** Effective Q1 2015, Outer Ring Road submarket has been carved out from erstwhile Peripheral and Northern submarkets. Further Suburban submarket has been further re-classified
into Suburban South and Suburban East. Erstwhile Eastern, Southern and Northern submarkets have been renamed as Peripheral East, Peripheral South and Peripheral North
respectively.
Conversion rate: US$ 1 = INR 63.61 and Euro 1 = INR 71.65
Net absorption refers to the incremental new space take-up
Renewals not included in leasing activity statistics
IT - Information Technology; ITeS - Information Technology-enabled Services; SEZ - Special Economic Zone; BFSI Banking, Financial Services & Insurance
Numbers for the second quarter are collated based on market information collected until 10 th June 2015
CBD/Off-CBD: M.G. Road, Millers Road, Vittal Mallya Road, Residency Road, etc.;
Peripheral South: Electronic City, Hosur Road, Mysore Road;
Outer Ring Road: Sarjapur, KR Puram, Hebbal;

Suburban East: Indira Nagar, Old Airport Road, C.V. Raman Nagar

Peripheral East: Whitefield;

Suburban South: Koramangala, Bannerghatta Road, Jayanagar

Peripheral North: Bellary Road, Thanisandara Road, Tumkur Road,

MARKET HIGHLIGHTS
Significant Q2 2015 Lease Transactions

SUBMARKET

TENANT

BUILDING CLASS

Republic of Whitefield (C1)

Whitefield

Wipro Limited

515,000

Manyata Mfar - Greenheart Phase IV

Outer Ring Road

AXA Business Services

220,000

Significant Q2 2015 Construction Completions

SUBMARKET

TENANT

BUILDING CLASS

SQUARE FEET

Global Technology Park (Block A & B)

Outer Ring Road

Linkedin, Vodafone

1,000,000

Manyata Mfar - Greenheart Phase IV

Outer Ring Road

AXA, Philips, Slk Software

852,800

Significant Projects Under Construction

SUBMARKET

TENANT

COMPLETION DATE

Bagmane Constellation Business park (Taurus Block-1)

Outer Ring Road

Amazon

Q3 2015

500,000

Brigade Magnum

Peripheral North

Coca Cola

Q3 2015

500,000

Cushman & Wakefield (India) Pvt. Ltd

4th Floor, Pine Valley
Embassy Golf Link Business Park
Intermediate Ring Road, Bengaluru 560 071
www.cushmanwakefield.co.in

For more information, contact:

Somy Thomas
Executive Director - Consultancy and Valuation &
Advisory, India
Tel: +91-80 4046 5555
somy.thomas@ap.cushwake.com

SQUARE FEET

SQUARE FEET

This report contains information available to the public and has been relied upon
by Cushman & Wakefield on the basis that it is accurate and complete. Cushman
& Wakefield accepts no responsibility if this should prove not to be the case. No
warranty or representation, express or implied, is made to the accuracy or
completeness of the information contained herein, and same is submitted subject
to errors, omissions, change of price, rental or other conditions, withdrawal
without notice, and to any special listing conditions imposed by our principals.
2015 Cushman & Wakefield, Inc. All rights reserved.