Bangalore, the IT capital of India, is facing a major challenge of limited supply available for leasing amid strong demand. The city had an overall vacancy rate of 4.1% against a total stock of 96 million sq ft of office space in 1Q16. By end-2016, the city’s vacancy is likely to be still under 5% which is similar to vacancy seen in some of Asia Pacific’s mature markets.  A natural consequence of this is rents moving upwards by as much as 10-15% over the next 12-18 months. Occupiers in immediate need of space and budget conscious start-up firms are working on some interesting solutions for their office requirements.

A few of the solutions that occupiers in Bangalore are either adopting or are planning to adopt are:

• Suburban locations: Some occupiers may opt for well-connected suburban locations that were not preferred earlier. In Bangalore, the demand is likely to expand from the eastern and southern sub-markets to the northern sub-markets.
• Improving efficiency: A few other occupiers are opting for improving the efficiency of existing space to accommodate their immediate space requirements. They are also adopting smart space or hot-desking for their sales and marketing staff who do not use the office space throughout the day.
• Short term leases: Occupiers are also opting for short-term leases in Grade B buildings or incubation space. Interestingly a couple of occupiers are working on replacing manpower with technology where ever possible.
• Multiple shifts: Some occupiers, especially a few business process outsourcing firms are remodelling their operations plan to introduce working in shifts so that the space can be used multiple times.
• Co-working or business centres: While all of this was seen earlier some time some place, what is more interesting to note is that co-working or business centre models are gaining in popularity for short-term expansion plans and especially among start-ups.
• Innovative alternatives: Start-ups in Bangalore have come up with extremely innovative workspace solutions that are within their often limited budget. A few start-ups are operating out of cafes that provide Wi-Fi and charge on an hourly or daily basis to use the space not reserved for F&B, and sometimes they are operating out of unused rooms or space in residences. Co-working is also gaining prominence as companies providing such solutions are coming up with space options that are cost effective. A few such companies are Awfis Space Solutions, BHIVE Workspace, GreenBubbles Startup Services, Silicon Business Space, 365 Shared Office Space and Cowork Café.

Necessity is the mother of invention. This is what Bangalore is witnessing at present. High demand amid limited supply and rising rents has led to many innovative, alternative space ideas and we foresee more such strategies coming up in the future.

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