Bengaluru, among all other Indian cities, has witnessed the fastest expansion of office spaces in 2022.
By, Agnidev Bhattacharya
India’s office market across seven of the country’s biggest cities: Mumbai, Delhi NCR, Bengaluru, Hyderabad, Chennai, Kolkata, and Pune, has hit a three-year high, recording a net absorption of 38.25 million sq. ft. in 2022, with Bengaluru leading with the highest absorption.
A report by Jones Lang LaSalle (JLL) India, a real-estate consultancy firm said that the net absorption for this calendar year has surpassed the five-year (2015-2019) pre-pandemic average by 3 percent, and it is second only to the 2019 net absorption figures for the past 10 years. Experts suggest that this hints at the strong comeback of the Indian office market post the pandemic.
Bengaluru recorded a 19 percent year-on-year growth, with 14.5 million sq. ft. expanding via office leasing alone. Coworking spaces have contributed significantly to this growth as their demand has seen a rise in 2022, explained Rahul Singh, the co-founder of ClayWorks Co-Working in Bengaluru.
“The price hike has been observed in certain niche pockets like HSR Layout, Koramangala and Bellandur. Markets like HSR have seen an almost 80 percent appreciation in rental rates post-COVID over pre-COVID. What costed Rs. 50 per sq. ft. now costs Rs 90 per sq. ft,” he added.
Though most companies have reacted positively to this boom, it has led to skyrocketing real estate prices, which most freelancers and start-ups cannot afford.
Ishita Agarwal, who works as a freelance architect in the city, said, “Working from home is not an option for me, since I am freelancing most of the time. But I can’t even rent out workspaces for myself as they have become more expensive over the last few months.”
Experts believe that the sudden boom is due to the rise in the trend of subleasing of office spaces, which has made the overall process much less time consuming and financially viable in the long run. They also say that office spaces will continue to expand in the city.
“The market for office spaces will not stop growing for at least the next 10 years as more and more companies invest in Bangalore’s IT sector, as well as the new and emerging ed-tech and fin-tech companies,” said Dr. Bipin Sony of the BR Ambedkar School of Economics.
Though the first half of the calendar year saw a steady expansion of office real estate in the city, the latter half failed to gain much steam owing to global economic uncertainties. This, in turn, led to a 22 percent year-on-year decline for office leasing in H2 of 2022.
Market research, however, indicates that the flexible office space market will grow at a compound annual growth rate of 6 percent from 2023 to 2027, with co-working spaces taking the lead in the city.