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Bengaluru-Beats Pune For Top Spot

Torbit - December 11, 2022 - - 0 |
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Bengaluru-Beats Pune For Top Spot- Torbit Realty

While Bengaluru and Pune remain the top commercial office destinations for IT-ITeS and coworking occupiers, Bengaluru has overtaken Pune in overall office space activity.  With 6.1 million sq. ft. of new office completions and nearly According to the Anarock report, Bengaluru had 6.08 million square feet of office absorption in H1 FY23, far outpacing Pune. During the period, Pune saw a mere 0.85 Mn sq. ft. of new office completions and approximately 1.35  million sq. ft. of office space absorption.

However, Pune is ahead of its IT counterpart in terms of office vacancy levels. According to Prashant Thakur, Sr. Director – Research, ANAROCK Group, at 7.8%, Pune’s office vacancy rate is the lowest amongst all top 7 cities, including Bengaluru – which had an office vacancy rate of 10.9% in H1 FY23. Both cities recorded similar yearly growth of 6% in average monthly office rentals.

Both Pune and Bengaluru have seen the IT-ITeS sectors dominating office space demand over the last decade. However, Bengaluru has stood its ground despite past office demand slowdowns, including during the COVID-19 pandemic. It remains the country’s most active office market with about. 6.08 million sq. ft. net absorption in H1 FY23 – the highest recorded in the city in the last six years.

Bengaluru Office Market Highlights

  • Nearly. 6.1 million sq. ft. of new office supply was infused in the city in H1FY23 – at 26%, it is the highest share after Hyderabad among the top 7 markets.  Bengaluru’s new office supply witnessed a 16% YoY dip. Driven by healthy fresh corporate leases, Bengaluru saw net office absorption surge to 6.08 million sq. ft in H1FY23, surpassing the absorption recorded in the corresponding period in FY22 by 90%
  • Average. monthly office rentals in the city during H1FY23 stood at INR 84 per sq. ft. and continue to harden in the key micro-markets due to rising office space demand. The city’s average office rentals increased by 6% over the corresponding period in the previous year. City-wide vacancy levels remained almost stable at 10.9% in H1FY23, a marginal change of 0.1% over H1FY22
  • With 35% of the leasing market share, the IT-ITeS sector led office market occupancy in the first half of FY23, followed by the BFSI and coworking at 30% and 18%, respectively 

Bengaluru: Office Demand-supply Dynamics

Pune Office Market Highlights

  • Approximately 0.85 million sq ft of new office supply entered the Pune market in H1FY23, declining by 32% over H1FY22. The city contributed the smallest share (4%) to India’s new office supply. On the net office absorption front, Pune saw net office absorption of 1.35  million sq.ft.– the highest in the past six years. Absorption rose by 4% Y-o-Y in H1FY23 due to strong occupier demand
  • Average. monthly office rentals in H1FY23 increased by 6% to INR 74 per sq. ft. The city’s vacancy rate was pushed up by 3.3% – from 4.5% in H1 FY22 to 7.8% in H1 FY23.
  • The top three largest office space occupiers in H1FY23 were IT-ITeS, coworking spaces, and manufacturing / industrial, with leasing transaction shares of 40%, 31%, and 18%, respectively 

Pune: Office Demand-supply Dynamics

Going forward, in the backdrop of a possible recession in the US in the new year, it will be interesting to see how far the office markets of Bengaluru and Pune get impacted. As India is not completely decoupled from global markets, caution is likely till early 2023.

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