Every investor, before deciding to invest in commercial real estate, should comprehend the demand-supply rule. It decides whether the rents will increase or not for the tenants. As far as the commercial office space market is concerned, four cities have been wielding influence and control. They are Hyderabad, Bangalore, Mumbai, and Pune. In these cities, office space marketing is rapid.
The strong office space supply has been here since 2019. In all, 28.7 msft of office space is going to be available on the inventory during 2024 and 2025.
However, because of the conditions that prevailed in 2021, the vacant office space has increased from 15% to 24%. At the same time, the inventory of office space registered growth. Because of the unregulated FSI policy, the office space inventory grew on the assumption that the demand for IT office space would increase in Bangalore and other cities.
Garden City emerged as a famous destination for customers searching for office space. The city became a stable market for office space with favourable demand and supply dynamics. During 2024 and 2025, the office space inventory is going to reach 22.9 msft. The demand for office space is pushed up by the location of campus-style tech parks, which house Fortune 500 MNCs and Global Capability Centers. The growing metro connectivity is also one of the factors contributing to the demand for office space’s growth. The rent of office space (normal variety) is being quoted at Rs 100 per sft. Therefore, the rents are going to go through the roof in the future.
The commercial city of Mumbai offers a wide variety of opportunities for investors as well as leaseholders. The monthly rentals vary from Rs 60 per square feet in Thane and Navi Mumbai. The rents in BKC properties in Mumbai cross Rs 600 per sft.
The expansion of office space during 2024 and 2025 is going to be 7.4 msft. The BKC Market in Mumbai is the main market where the rents are very high but the vacant office space is very low. Till 2025, there is not going to be any supply of office space in BKC Market inventory.
The Pune market has favourable demand-supply dynamics. During 2024 and 2025, 13.4 msft of office space is going to be added to the city office space inventory. SBD East has emerged as the largest micromarket in Pune because of its strategic location close to the airport and the Central Business District. The Pune market is one of the strongest markets in India. The vacancy rate here is set at 6.
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