The e-commerce boom seems to be over as far as real estate space absorption is concerned in Bengaluru.
The e-commerce boom seems to be over as far as real estate space absorption is concerned in Bengaluru. Although Bengaluru witnessed a strong growth in office market transactions in 2016 with the absorption of 11.4 million sq ft, the share of e-commerce in the total office space declined drastically. The share of e-commerce was just around 2% last year from around 5% in 2015 and the total office space leased by the sector was 181,000 sq ft.
According to data available with property consultant Knight Frank India, the e-commerce sector witnessed its lowest office space absorption in Bengaluru in the last few years. There were a handful of transactions, with Snapdeal snapping up 35,000 sq ft, Amazon Internet Services (20,000 sq ft), Groupon (20,000 sq ft), Quikr (8,000 sq ft) and MakeMyTrip among others.
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In contrast, the e-commerce sector accounted for 4% of transactions in 2014, which went up to over 5% in 2015. A good volume of space was taken up by e-commerce firms between 2013 and 2015, regarded as the golden period for e-commerce firms. In 2015, two large players in the industry such as Amazon and Flipkart signed deals for pre-committed space of 3.2 million sq ft space together. However, this space will be available for occupation by end of 2017.
“While e-commerce still holds potential, there were fewer e-commerce transactions in the second half of 2016. The e-commerce is part of the other services sector, which together increased its share in the overall office space transactions to 25% in the second half of 2016,” Satish B N, executive director – South, Knight Frank said.