Even as office space occupied in Bengaluru has crossed the mark of 100 million square feet, the share of IT and ITeS is on a downward curve. While these sectors continue to occupy large amounts of space, their share has dropped from 67-71% in 2013 to 50% in 2015.
The IT/ITeS sector accounted for 50% of the 6.1 million square feet space added in the first half of 2015. Total office space to be added in 2015 is expected to be 11.10 million sq ft, according to Knight Frank, a global property consultant.
While the IT sector has seen its share coming down gradually in the office market space, emerging sectors such as e-commerce and startups have taken up a sizeable portion of office space. Other sectors that have grown their share in Bengaluru’s office market include the BFSI, retail and pharma sectors. The e-commerce sector, which started absorbing space in a big way two years ago, went for consolidation in 2014 and early 2015 by adding huge space.
While Amazon booked 1.2 million sq ft of office space in a yet-to-be-ready built-to-suit (BTS) facility on Sarjapur Outer Ring Road, Bengaluru-based home-grown e-commerce major Flipkart accounted for a whopping 2 million square feet space. Flipkart’s deal is said to be the single-largest in the country in another under-construction BTS project on Marathahalli Outer Ring Road.
The overall share of other services (including e-commerce) has risen from 24% in H1 2014 to 36% in H12015, signifying an increase in office space absorption by companies belonging to sectors such as media, logistics, healthcare and e-commerce. The BFSI sector increased its share from 3% to 13% this year. Besides the deals transacted by domestic e-commerce majors such as Snapdeal, other prominent transactions include LinkedIn and Vodafone, which took up spaces of 207,000 sq ft and 120,000 sq ft, respectively, in 2015.
The IT/ITeS sector — which witnessed some major deals in 2014 such as Oracle (180,000 sq ft), Accenture (155,000 sq ft), British Telecom (300,000 sq ft), Capgemini (440,000 sq ft) and Altisource (180,000 sq ft) — continued to add a significant level of space in 2015. Some major transactions in 2015 include Sapient (700,000 sq ft), Seagate (130,000 sq ft), Epsilon (140,000 sq ft) and Tech Mahindra (89,000 sq ft), among others.
“Going forward in 2016 and beyond, the IT/ITeS companies will be compelled to go for built-to-suit office spaces in Bengaluru. They might have to even settle for smaller spaces in the range of 30,000 sq ft or up to 100,000 sq ft. There are a sizeable number of such smaller buildings are available in and around Electronic City,” felt Satish BN, executive director-south, Knight Frank India.
However, he said it would be very difficult to predict at this stage whether the share of IT and ITeS will drop further from the present 50% levels in the total office market in 2016.
“The IT/ITeS sector will continue to play a dominant role in the office market landscape in Bengaluru, although its share might decrease slightly owing to the lack of readily available office space. If somebody wants large space in the range of above a million sq ft, they will have to go for some Greenfield projects around the peripheral ring road,” Satish said.