Bengaluru’s office rental market is poised for a notable uptick, with rents projected to grow by 4.0% to 4.5% by the end of 2024, according to a recent report by JLL. This anticipated increase comes amidst a robust office supply pipeline, with expectations of 14–15 million square feet of new office space entering the market by year-end. Concurrently, net absorption is expected to match this with a figure of 10–11 million square feet, maintaining a balanced demand-supply equation and stabilising vacancy rates.
The city’s office sector has demonstrated considerable dynamism, with a significant quarterly leasing volume of 6.1 million square feet recorded in Q2, marking it as the third highest on record. Notably, IT occupiers accounted for approximately 31% of this leasing activity, with Manufacturing/Industrial and BFSI sectors contributing 29% and 26%, respectively. This vibrant leasing activity has driven a 26% quarter-on-quarter increase in net absorption, which reached 2.2 million square feet for the quarter, highlighting sustained demand across various sectors.
The growth in office supply has surged, with 4.1 million square feet added in Q2—an increase of 2.8 times compared to the previous quarter. This new supply has primarily benefited the SBD and Electronic City submarkets. Despite this, the overall vacancy rate has risen slightly to 13.9%, reflecting the increased supply. By the end of 2024, vacancy is projected to range between 14% and 14.5%, driven by persistent demand for Grade A office spaces. The Central Business District (CBD) and Whitefield submarkets have recorded the highest rent growth, with a quarter-on-quarter increase of 3% to 3.5%, underscoring the premium status of these areas.
