Top 4 emerging commercial real estate trends in Bangalore

Bangalore, being a steady market for commercial real estate, has emerged as the frontrunner amid the other major cities of South India. While the city has always been at the pinnacle of office demand, the COVID-19 pandemic and the consequent lockdown starting March 2020 onwards, have had an adverse impact on office transactions across the city. In a tumultuous business environment, here are some major trends that are likely to pick up the pace in the ensuing months.

. The city reported the highest ever tally of office transactions, at 1.42 mn sq m in 2019. However, post the outbreak of novel Coronavirus, the ongoing deals across the city faced the brunt of procedural delays as site inspection and registration activities came to a grinding halt. With a subsequent decline in the number of new enquiries, the commercial market saw transactions going down by 42 percent, YoY, in H1 2020. Given the fallouts in an otherwise buoyant commercial real estate market of Bangalore, new concepts are likely to emerge in the times to come.

Rental Negotiations:

Rental growth was strong in Bangalore since the last five years, and a similar trend was noted until March 2020. With the outbreak of COVID-19, the majority of businesses came to a standstill, resulting in owners, as well as organisations seeking rental concessions or rent deferments from the landlords. Revisiting the rental agreements has become the new necessity, which is likely to remain evident even in the next 2-3 months. With the current need to cut down the operational costs, negotiations shall form an integral part of the upcoming commercial deals. In some cases, the deal might also be conclusive, thereby leading to exits.

Decentralisation:

Taking cognisance of the need for social distancing, new rules are expected to emerge concerning office space utilisation, layout, and safety requirements. Moreover, in the light of healthier working environments, industries such as IT/ITeS and BFSI are likely to allot larger spaces for the workforce. A big chunk of office spaces in Bangalore (almost 30 percent) is occupied by the Information Technology Sector, followed by the manufacturing (19 percent) and BFSI sectors (13 percent). However, several organisations are expected to decentralise their operations in the ensuing quarters. Amid such a scenario, the

is further likely to gain prominence amid giant players.

Affordable offerings:

With the increase in exits and decentralisation, the demand for quality yet affordable spaces will also witness a simultaneous rise in the coming months. Given the decrease in the annual income of employees and the fear around the stability of employment, the market is expected to witness a plethora of new offerings, especially below Rs 50 lakh. This is a trend that has never been observed, especially concerning Bangalore’s commercial market. The developers, in order to increase the leasing activity, are further likely to relook the floor plan or re-work on the services side and payment plans. Free Common Area Maintenance (CAM) for a certain period, lease assistance, and assured rentals are some of the schemes that are expected to garner buyer’s interest in the commercial domain.

Refurbishment of existing office spaces:

Going ahead, organisations need to re-design and re-configure their existing spaces to combat future challenges. While the usable space will increase over a given period of time, the focus will shift to cleanliness and safety. This means that the new design will hinge more on the

for collaboration rather than featuring large meeting places. Touchpoints shall be replaced via sensor-activated doors, lights, and taps. For over a decade, benching has been preferred by companies for cutting down the square foot lease space cost. However, the trend, in general, will decline. Not only Bangalore, but almost all the major metros will also witness a sort of refurbishment, which can result in improved focus, hygiene, and productivity across multiple sectors.

As averred by Vishal Parwani, Owner, SSB Properties, Bangalore, “The tenants in the commercial real estate market are actively seeking rental concessions up to 30 percent on the existing rates. In areas where the prices are quite high, the buyers expect concessions up to 40 percent. In the retail segment, especially in parts of Central Bangalore, where the existing rate is Rs 250-300 per sq ft, the buyers are asking for a discount of up to Rs 150 per sq ft. As far as the office sector is concerned, the buyers are looking for small spaces priced up to Rs 60-65 per sq ft, whereas the actual rate is Rs 100-105 per sq ft. Decentralisation of office spaces is yet another major transformation that we shall witness in the coming months. Already, a large number of corporates, especially in areas such as Whitefield, Bannerghatta, Hebbal, Mysore Road, Koramangala, and select parts of Central Bangalore, have decentralised their operations. Instead of huge office space, the organisations are now joining hands with co-working operators to meet their space requirements. Contrary to the trend of benching or open office spaces, the trend of space-per-seat is becoming popular.”

While the industry is trying its best to calibrate to evolving business dimensions, a slowdown is inevitable in

However, it would be interesting to see whether the transformation would help the city’s realty sector revive in the coming quarters or not.