M A R K E T B E AT

BENGALURU
Office Q4 2022

Leasing activity remains strong in Q4; GLV & Net absorption hits new peak in 2022
Bengaluru’s office sector continues to witness strong leasing momentum with gross lease volume of 5.3 msf during Q4, a 45% growth on a q-o-q basis. Leasing
activity in Q4 was driven by new demand for space, with fresh leases contributing around 75% of quarterly GLV. Term renewals were recorded at 1.2 MSF
during the quarter, which was highest seen in 4-5 quarters. It probably indicates the keen interest of occupiers in retaining space in quality assets given the tight
5.3 msf GROSS LEASING (Q4 2022) vacancies in prime markets of Bengaluru. Outer Ring Road continued to account for majority share (44%) in quarterly GLV, followed by Peripheral East with
25% share. Likewise, IT-BPM accounted for 31% share in Q4 GLV, followed by Flexible workspace and Engineering & Manufacturing sectors with 16% and 13%
shares, respectively.
2.5 msf SUPPLY/COMPLETION (Q4 2022) Sustained leasing activity that continued into the last quarter added up to a total GLV of 18.7 msf for 2022, recording highe st-ever annual GLV for the city. Full
year lease volume for 2022 surpassed 2019 levels by ~20%. Increasing demand from occupiers across all sectors resulted in a 65% y-o-y growth in GLV over
2021. The record-breaking leasing activity in Bengaluru helps in retaining its top contribution (26-30%) to pan India GLV, both on a quarterly and yearly basis.
Fresh leases accounted for highest share in annual GLV (73%), while pre-commitments came in with 16% share in 2022 GLV. On an annual basis, IT-BPM
9.5% VACANCY (Q4 2022) continued to dominate with 36% share in GLV, while Engineering & Manufacturing and Flexible workspace sectors accounted for a reasonable 22% and 15%
shares, respectively. Healthy fresh leasing and higher pre-lease in delivered projects helped Bengaluru record a net absorption of 10.4 msf in 2022. As
estimated earlier, 2022 net absorption volume has been a 1.5x growth over entire 2021 and approx. 11% higher than 2019 net ab sorption levels.

2022 supply at a five-year peak; supply pipeline remains strong

Bengaluru witnessed healthy project completion of 2.5 msf during last quarter of the year. Despite a 32% drop on a q -o-q basis, annual project completion stood
MARKET INDICATORS OVERALL
at ~12 msf, a record high since 2017. Backed by fast-paced construction and healthy pre-commitments that were signed during previous years, 2022 supply
Q4 2022
surpassed 2021 levels by 19%, while growth over 2019 was higher of ~31%. Rising demand for quality space has resulted in fast er construction of speculative
projects in the city. With ~12 msf supply during 2022, Bengaluru ranked second in pan India supply with 23% share, after Hyde rabad.
Q4 2021 Q4 2022 12 month
Forecast Outer Ring Road continued to account for majority share (82%) in quarterly supply. At annual level, ORR and Peripheral East a ccounted for 56% and 16%
Overall shares, respectively. New supply in Q4 got operational with only 10-11% of the space being leased, resulting in an impact on city level vacancy which stood at
9.5% 9.5% 9.5% by end 2022 (~80 bps rise q-o-q). We anticipate a robust supply of 4.5-5 msf during H1 2023; which is likely to cause a further rise in vacancy levels.
Vacancy

Weighted Average
82.70 82.70
Rents remain unchanged; vacancy tightens across majority markets
Net Asking Rent
(INR/sf/month)
Office rentals remained unchanged during the quarter. Driven by heathy leasing, vacancy tightened across most submarkets on a q-o-q basis. Outer Ring Road
has been an exception. Despite strong leasing in its earlier existing projects, healthy completions (2.0 msf) during Q4 with relatively low occupancy levels
YTD Net resulted in a q-o-q rise in the submarkets’ vacancy levels. However, despite a q-o-q vacancy increase in ORR and at the city level, we anticipate rentals to
6,777,641 10,416,574
Absorption (sf) remain range bound going forward, backed by healthy leasing momentum.
NET ABSORPTION & SUPPLY OVERALL VACANCY & ASKING RENT
90.00 12.00%
15.00
75.00 10.00%
60.00 8.00%
10.00
45.00 6.00%
30.00 4.00%
5.00
15.00 2.00%
0.00 0.00%

Q1 2016
Q2 2016
Q3 2016
Q4 2016
Q1 2017
Q2 2017
Q3 2017
Q4 2017
Q1 2018
Q2 2018
Q3 2018
Q4 2018
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Q3 2022
Q4 2022
2023F
0.00
2016 2017 2018 2019 2020 2021 2022 2023F

NET ABSORPTION (MSF) NEW SUPPLY (MSF) WEIGHTED AVERAGE RENTS (INR/SF/MONTH) OVERALL VACANCY(%)
M A R K E T B E AT

BENGALURU
Office Q4 2022
MARKET STATISTICS

YTD GROSS PLANNED & UNDER GRADE A WTD. AVG. RENT

INVENTORY YTD CONSTRUCTION YTD NET
SUBMARKET VACANCY (%) LEASING CONSTRUCTION
(SF) COMPLETIONS (SF) ABSORPTION (SF)
ACTIVITY# (SF) (SF)^ INR/SF/MO US$/SF/YR EUR/SF/YR

CBD / Off-CBD 7,528,322 2.3% 476,130 887,714 445,000 578,536 161.00* 23.48 23.11
Outer Ring Road 79,754,183 7.3% 6,694,905 17,014,742 6,683,718 3,576,220 107.00 15.60 15.36
Peripheral East 34,135,019 14.3% 5,590,111 9,555,989 1,950,000 1,926,356 68.00 9.91 9.76
Peripheral North 9,545,654 32.8% 2,695,931 8,897,621 860,000 2,033,378 75.00 10.94 10.77
Peripheral South 11,992,839 14.1% 1,235,080 3,613,406 - -210,475 65.00 9.48 9.33
Suburban East 21,369,292 1.6% 1,506,908 2,185,160 996,000 1,469,325 127.00** 18.52 18.23
Suburban North West 1,100,000 1.1% 51,220 3,969,825 - 17,720 158.00 23.04 22.68
Suburban South 8,710,989 6.2% 468,963 940,000 963,156 1,025,515 93.00 13.56 13.35
TOTALS 174,136,298 9.5% 18,719,247 47,064,457 11,897,874 10,416,574 82.7 12.06 11.87
The report highlights Grade A project details only. Certain historical numbers may have been corrected through addition / deletion of older / and or refurbished projects, basis grade A building
classification. It might also have been revised to account for changes in built-up / and or leasable area and modifications in tenant leases, in order to reflect accurate market conditions.
#YTD gross leasing activity includes pre commitments and term renewals, which add up to 1.9 msf for 2022
^ Includes planned & under construction projects until 2025 Srija Banerjee
Net absorption refers to the incremental new space take-up;
Weighted average asking rental rates for vacant spaces that provide core facility, high-side air conditioning and 100% power back up Assistant Vice President, Research Services
*CBD/Off-CBD- Weighted average rents, submarket includes certain outperformers where quoted rentals are above INR 220-250/Sf/Month +91 080 40465555 /[email protected]
**Suburban East - Weighted average rents, submarket includes certain outperformers where quoted rentals are above INR 150-160/Sf/Month.
Key to submarkets: Suvishesh Valsan
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 – Director, Research Services
Bellary Road, Thanisandra Road, Tumkur Road; Suburban Northwest – Rajaji Nagar, Malleshwaram. +91 22 6771555 /[email protected]
US$ = INR 79.4 AND € = INR 80.2
Numbers for fourth quarter 2022 are based on market information collected until 22nd December 2022

KEY LEASE TRANSACTIONS Q4 2022

PROPERTY SUBMARKET TENANT SF TYPE
SJR Primeco Union City Peripheral East Tablespace 450,000 Fresh Lease
cushmanwakefield.com

Bhartiya Centre for Information Technology Peripheral North IBM 267,576 Fresh Lease A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION
Cushman & Wakefield (NYSE: CWK) is a leading global real estate
Manyata Embassy Business Park Outer Ring Road Pretium Enterprise 55,341 Fresh Lease services firm that delivers exceptional value for real estate occupiers
and owners. Cushman & Wakefield is among the largest real estate
Kalyani Magnum Suburban South Arris Global 46,771 Fresh Lease services firms with approximately 50,000 employees in over 400
offices and approximately 60 countries. In 2021, the firm had revenue
of $9.4 billion across core services of property, facilities and project
SIGNIFICANT PROJECTS PLANNED AND UNDER CONSTRUCTION management, leasing, capital markets, and valuation and other
PROPERTY SUBMARKET MAJOR TENANT SF COMPLETION services. To learn more, visit www.cushmanwakefield.com or follow
DATE @CushWake on Twitter.

Embassy Manyata (M3)-Phase I Outer Ring Road Undisclosed client 400,000 Q1 2023 ©2022 Cushman & Wakefield. All rights reserved. The information contained within
this report is gathered from multiple sources believed to be reliable. The information
Embassy Business Hub - Block 1 Peripheral North Undisclosed client (entire building) 600,000 Q2 2023
may contain errors or omissions and is presented without any warranty or
representations as to its accuracy.
Bagmane Solarium City - Argon-South Tower Peripheral East Zebra Technologies, Symbol Technologies 530,000 Q1 2023