With the economic activities gaining pace this year, the commercial real estate sector also made some significant gains in 2022. Bengaluru and Pune have emerged as the top two cities in terms of office destinations. 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.
According to a report by ANAROCK, Bengaluru was far ahead of Pune in office activity with approx 6.1 mn sq. ft. of new office completions and approx 6.08 mn sq. ft. office absorption in H1 FY23. During the period, Pune saw a mere 0.85 mn sq. ft. of new office completions and approx. 1.35 mn sq. ft. of office space absorption in H1 FY23.
Prashant Thakur, Sr. Director – Research, ANAROCK Group, said, “However, Pune is ahead of its IT counterpart as far as office vacancy levels are concerned…At 7.8%, Pune’s office vacancy rate is the lowest amongst all top 7 cities, including Bengaluru – which had an office vacancy of 10.9% in H1 FY23. Both cities recorded similar yearly growth of 6% in average monthly office rentals.”
According to the report, 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 approx. 6.08 mn sq. ft. net absorption in H1 FY23 – the highest recorded in the city in the last six years.
Many multinationals and businesses have become cautious about expansion in such an environment. Many global tech giants have already started layoffs to curtail costs and weather-proof their balance sheets. Currently, the Indian economy is in a far stronger position than many of its western counterparts.
That said, India is not entirely decoupled from global markets, which provide it with a sizeable chunk of IT/ITeS business. Many corporate leasing decisions have already veered into the slow lane as they monitor global markets. This caution is likely to continue till early 2023.
