Bengaluru gross office leasing up 18% to 4.9m sq ft in Q3 | Real Estate Asia
, India

Bengaluru gross office leasing up 18% to 4.9m sq ft in Q3

This was driven by manufacturing occupiers.

In a report, JLL said the gross office leasing of 4.9 million sq ft in Q3 2024 was 18% higher q-o-q. Manufacturing/Industrial occupiers led with 27.0%, with IT/ITeS holding the second highest share. The latter, however, held a sustained quarterly average of around 28% (Q1-Q3 2024).

“The city’s net absorption in Q3 recorded 4.1 million sq ft, a 90% growth q-o-q, and the second highest after Q2 2022. The SBD submarket cumulatively accounted for 89% of Q3 net absorption, and Whitefield was the other top contributor,” the report added.

Here’s more from JLL:

Quarterly supply of 3.1 million sq ft came on stream in Q3, with all completions recorded in the SBD submarket. While supply was down 23% q-o-q, the estimated full-year supply is 13 to 13.5 million sq ft, on par with the past five-year annual average.

Lower q-o-q supply amid healthy leasing activity caused a 60 bps q-o-q drop in vacancy, which stood at 13.3% at the city level. Vacancy by end-2024 is expected to remain in the range of 13–13.5% despite the strong supply inflow, driven by sustained demand momentum.

Rent growth for the quarter almost on par with 2023 quarterly average

Bengaluru city rents rose 0.7% q-o-q, almost on par with the quarterly average rent growth during 2023. The highest rent growth was seen in the CBD and SBD North submarkets.

Capital values recorded a q-o-q growth of 1.2%, almost on par with the average q-o-q growth from 2023. Yield rates recorded a marginal compression of 5 bps q-o-q.

Outlook: Healthy demand despite supply influx to keep city’s vacancy range-bound

Around 13–13.5 million sq ft of net absorption is expected by end-2024, around 25–30% more than the previous two years. Bengaluru may continue to witness robust demand amid occupier portfolio expansion and by global companies establishing captive technology centres.

Overall average rents are expected to be on an upward trajectory and grow by 3.5–4.0% y-o-y. This growth will be driven by tight vacancy levels, with prominent developers quoting higher-than-market-average rents amid the continued strong demand for space.

 

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