Bengaluru metro impact: Whitefield may witness 8-10% rental growth in 2 yrs

Rentals of office spaces in Whitefield are likely to go up by about 8-10 percent over the next two years.

With the Baiyappanahalli-Whitefield metro project likely to be fully operational by mid-year, rentals of office spaces in Whitefield are likely to go up by about 8 to 10 percent over the next two years.

This is because improved connectivity is likely to attract more businesses to set up offices in previously inaccessible areas, according to a new report, a report by Colliers, titled Bengaluru Metro Rail: Key office market impact, said.

Whitefield, the second-largest office market in Bengaluru, has office stock of about 40.4 million sq ft, with vacancy levels hovering around 17.2 percent as of Q4FY2022. However, the metro project is likely to boost occupier activity in the region, with enhanced accessibility and reduced commute time, the report stated.

The growth in rentals will also hinge upon the overall occupier demand and macro-economic factors, the report said.

“Metro's enhanced connectivity can foster the growth of offices in key locations. Improved connectivity, such as efficient and reliable public transportation options, can attract more businesses. With better connectivity, companies can benefit from a larger pool of potential employees who can commute to their offices easily and efficiently,” said Arpit Mehrotra, managing director, Office Services at South India & Head of Flex, India.

This, in turn, can lead to a more diverse and skilled workforce, enhancing productivity and innovation. Moreover, better connectivity can also help businesses reduce operational costs, particularly in transportation and logistics. By having easy access to public transportation, companies can reduce their reliance on private vehicles and streamline their transportation and logistics operations, he said.

The report tracks the progress in the construction of the metro project at different stages alongside its impact on the commercial office segment. It deep- dives into how Whitefield and the markets in the central business district (CBD) have witnessed a steady rise in office supply as well as leasing over the years, as the metro work has progressed.

Rise in average annual supply

The report says the average annual supply in Whitefield rose by 10 percent during 2017-22, as the construction of the metro project began, compared to 2011-16. Gross leasing in Whitefield rose 18 percent during the metro construction stage (2017-22), compared to the planning stage (2011-16).

In the CBD, over the last 12 years from the time of metro project construction, about 64 percent of total leasing has happened during the metro operation stage (2017-22). Moreover, office supply in the CBD rose more than four times during the operation stage (2017-22), led by the expected improved connectivity of the metro.

“Bengaluru CBD has undergone a transformation through building upgrades, redevelopments and change in land uses since the metro work commenced. This has spurred occupier activity in the area, leading to a 79 percent increase in leasing during 2017-22 as compared to a preceding six-year period. Today, the CBD market is experiencing low vacancy levels at 3.2 percent, despite increased supply, indicating occupiers’ need to be centrally located with superior connectivity. The metro project has undoubtedly transformed the office market of CBD and will positively impact the Whitefield market as well in next 2-3 years as the Baiyappanahalli - Whitefield metro begins operations,” said Vimal Nadar, senior director and head of research at Colliers India.

Once the metro gets fully operational in Whitefield in 2023, flex operators are also likely to strengthen their presence in the market, the report mentioned.