From ET Realty
BENGALURU: Growing demand for commercial space from startups in India led to a 10% increase in rentals in the hubs for these companies over the past one year, according to real estate services firm CBRE.
The top five micro markets that saw rentals moving up include Cybercity in National Capital Region, Koramangla in Bengaluru, Andheri East and Goregaon in Mumbai and Kukatpally, Manikonda in Hyderabad. “The cities that led the demand include Bengaluru and Gurgaon. By 2020, there will be 11,500 startups, employing over 250,000 people,” said Ram Chandnani, managing director-transaction services at CBRE South Asia.
Nearly 10% of the total office market demand is currently driven by e-commerce companies. This segment barely existed two years ago. In 2015, these companies leased 4.3 million sq ft compared with 0.54 million sq ft in 2014, as per CBRE.
“At a time when quality supply is drying up in the market, the additional demand coming in from e-commerce has surely had a positive effect on the rental values of key e-commerce favourite micro markets like Mumbai’s Eastern Suburbs, Whitefield in Bengaluru and NH8 in Gurgaon,” said Ramesh Nair, chief operating officer business and international director at JLL India.
Nair said the demand from e-commerce is generally directed towards quality Grade A spaces which provide large floor plates in the peripheral business districts of various cities including Mumbai, Delhi-National Capital Region, Bengaluru, Chennai and Hyderabad. Taxi service provider Ola, for instance, recently leased 20,000 sq ft of prime office space at Embassy Golf Links in Bengaluru, while online marketplace Snapdeal rented 0.43 million sq ft in Gurgaon and Pinelabs, a payment solutions firm, leased 60,000 sq ft in Noida.
Oyo Rooms leased 0.1 million sq ft in Space Palazo, Gurgaon. “We have been seeing active interest from e-commerce companies, which are now an important segment of our overall portfolio. It is a small but interesting new area and we have been looking at different solutions to respond to this segment,” said Mike Holland, chief executive of Embassy Office Parks, a joint venture between Embassy Group and Blackstone.