With the Baiyappanahalli-Whitefield metro project likely to be fully operational by mid-year, office real estate in key locations of the city are likely to get a major boost. The rentals of office spaces in Whitefield are likely to go up by about 8-10% over the next two years, as per Colliers’ latest report . The growth in rentals will also hinge upon the overall occupier demand, macro-economic factors etc. The metro line towards Whitefield, which became partially operational in March 2023, has been one of the most anticipated lines in the city as it will connect the technology hub of Whitefield to the rest of the city.
Whitefield, the second largest office market in Bengaluru, has office stock of about 40.4 million sq feet, with vacancy levels hovering around 17.2% as of Q4 2022. However, metro project is likely to boost occupier activity in the region, with enhanced accessibility and reduced commute time.
Arpit Mehrotra, Managing Director, Office Services – South India & Head of Flex, India says that Metro’s enhanced connectivity can foster the growth of offices in key locations. Improved connectivity, such as efficient and reliable public transportation options, can attract more businesses to set up offices in previously inaccessible or inconvenient to reach. With better connectivity, companies can benefit from a larger pool of potential employees who can commute to their offices easily and efficiently. This, in turn, can lead to a more diverse and skilled workforce, enhancing productivity and innovation. Moreover, better connectivity can also help businesses reduce operational costs, particularly in transportation and logistics. By having easy access to public transportation, companies can reduce their reliance on private vehicles and streamline their transportation and logistics operations.”
The report tracks the progress in the construction of the metro project at different stages alongside its impact on the commercial office segment. It deep dives into how Whitefield and CBD markets have witnessed steady rise in office supply as well as leasing over the years, as the metro work has progressed. Report highlights that the average annual supply in Whitefield rose by 10% during 2017-22, as the construction of metro project began, compared to 2011-16 period. Gross leasing in Whitefield rose 18% during the metro construction stage (2017-22) compared to planning stage (2011-16).
In CBD, over the last 12 years from the time of metro project construction, about 64% of total leasing has happened during the Metro operation stage (2017-22). Moreover, the office supply in the CBD rose more than 4 times during operation stage (2017-22), led by the expected improved connectivity of the metro.
Bengaluru CBD has undergone a transformation through building upgradations, redevelopments and change in land uses since the metro work commenced. This has spurred occupier activity in the area, leading to a 79% increase in leasing during 2017-22 as compared to preceding 6-year period. Today, CBD market is experiencing low vacancy levels at 3.2%, despite increased supply, indicating occupiers’ need to be centrally located with superior connectivity. Metro project has undoubtedly transformed the office market of CBD and will positively impact the Whitefield market as well in next 2-3 years as Baiyappanahalli – Whitefield metro begins operations, says Vimal Nadar, Senior Director and Head of Research, Colliers India.
Overall, improved connectivity can create a virtuous cycle of economic growth, where more businesses set up offices in key locations, leading to more job opportunities and a more robust local economy,.
Average annual leasing and supply in Whitefield (million sq ft)
|Announcement Stage (2007-10)||Planning Stage *(2011-16)||Construction Stage (2017-22)|
|Average annual Gross leasing||1.5||1.9||2.2|
|Average annual New supply||2.0||2.2||2.4|
*Planning Stage is the period between project approval and commencement of civil work that includes project formulation and pre-construction activities such as land acquisition, geotechnical surveys, etc.
Gross absorption: does not include lease renewals, pre-commitments and deals where only a letter of Intent has been signed.
Data pertains to Grade A buildings
Flex space is expected to see increased activity in Whitefield .Over the years, while demand for flex space has skyrocketed in the city, the expansion of flex players has been limited in Whitefield due to its limited connectivity with other parts of the city. For instance, during 2022, while flex space contributed to 13% of the total leasing of city, it accounted for only 2% of the total leasing of Whitefield. However, once metro gets fully operational in Whitefield in 2023, flex operators are likely to strengthen their presence in the market. As occupiers look at decentralized working, Whitefield has numerous advantages for flex spaces, ranging from established residential catchment in the form of presence of young IT professionals and expats,seamless connectivity to other parts of the city once metro gets operational,presence of Grade A office projects and competitive rentals. As such Whitefield is expected to cater to the spill over demand from Outer Ring Road and to become a preferred office location once the connectivity to central Bengaluru gets enhanced.