Office relocations in Bangalore jumps 301% in first half of 2013

BANGALORE: Bangalore office space recorded the highest proportion of relocations during first half of 2013 with an increase of over 3 times when compared to same period last year as companies use the current economic slowdown to relocate and consolidate their operations to save cost.


Figures provided by property consultants-Cushman & Wakefield-show that relocation of commercial space across the top eight Indian cities in January to June, 2013 was noted at 5.46 million square feet (msf) which was 2.5 times higher compared to the same period last year and is one third of the total leasing activity. Bangalore contributed 2.25 million sft of office space relocation, a jump of 301% over last year. This was followed by National Capital Region (NCR), at 0.84 million sft, Hyderabad 0.65 million sft and Mumbai at 0.63 million respectively.

"The markets have seen a large number of corporate relocating and consolidating their operations within a city to locations with quality construction and space scalability options at rentals lower by as much as 15-30%," says Ritesh Sachdev, executive director, tenant strategies & solutions, Cushman & Wakefield. Total office space absorption stood at 16.36 million sft in the first half of 2013.

"IT/ITeS saw major relocations across the top eight cities to peripheral locations. Other key sectors such as BFSI and Consulting to name a few moved to suburban locations within the cities," says Sachdev.

During H1 2013, Bangalore saw companies relocating from CBD/Off-CBD locations such as M.G. Road, Millers Road, Vittal Mallya Road and Residency Road to peripheral regions such as the Outer Ring Road with the average relocation deal size was of approximately 100,000 sft.

Additionally, Hyderabad saw active relocations from CBD/ Off-CBD locations such as Banjara Hills Road No. 1, 2, 10 & 12; Begumpet, Somajiguda etc. given the non availability of Grade A space to suburban locations of Madhapur and Gachibowli with relatively lower rentals by approximately 10-11%. In the NCR, office occupiers opted to relocate from prime locations in Delhi to Gurgaon as well as within Gurgaon with the rental differentials in the range of 20-30% translating to cost advantage to the occupiers.