The current stock stands at 10.90 mn sq ft and is expected to reach 11 mn sq ft by the end of 2020
The commercial sector in India has thrived over the past decade and will continue to flourish. While the pandemic has led to a temporary blip in the growth story of the market, recovery is expected by next year.
Occupiers of commercial spaces are now planning their space consumption keeping in mind factors such as flexibility in lease terms, minimum capital investment, rental costs, connectivity, commute and social distancing space.
Tenants are also looking for micro-markets where additional space availability has been created given the recent portfolio optimisation exercise that has been undertaken by a majority of commercial occupiers.
A micro-market that has developed to be a realty hub with appreciation potential amid the ongoing economic crisis is SBD West in Pune.
Assessing the growth of Pune’s SBD West
In Pune, the micro-market SBD West comprising of Baner, Balewadi and Mumbai-Bangalore highway is seeing an upward surge in demand driven by expansions of IT and tech companies, and the need for flexible office spaces during the pandemic.
SBD West witnessed a year-on-year increase in absorption from 0.5 mn sq ft in 2018 to 1.2 mn sq ft in 2019 and 0.7 mn sq ft in H1 2020 and 2021 SBD West is expected to witness absorption of about 1mn sq ft.
Over the last few years, this micro-market has grown to become a prominent location owing to the talent pool that resides in locations such as Kothrud, Karve Nagar, Sinhgad Road, Wakad, Bavdhan and Pashan.
Factors such as availability of grade-A multi-tenanted buildings, proximity to high-density residential locations and easy accessibility to Mumbai by road have contributed to the growth. It is an attractive option for occupiers who not looking for exorbitant investments.
Even during the pandemic, SBD West continued to strive and remained occupiers’ favourite. While reaching pre-COVID 19 levels may take some time, we expect to witness green shoots of recovery within the next 6 to 12 months.
The current stock stands at 10.90 mn sq ft and is expected to reach 11 mn sq ft by the end of 2020. By 2021, it will reach 12.20 mn sq ft. The size of space taken up by occupiers in this micro-market are typically in the range of 30,000 to 100,000 sq.ft. with a few exceptions of larger commitments in the range of 200,000 to 4000,000 sq.ft.
Commitments from flexible office operators have also formed a large part of the absorption in this micro-market.
While the occupiers are on a wait-and-watch mode in terms of their real estate strategies, demand and supply in the next few quarters is expected to pick on account of the expansion of IT and ITes companies and the rising popularity of flexible offices spaces.
While the rentals across the city might witness a marginal reduction owing to the pandemic losses, SBD West is likely to attract a major load of occupiers and tenants. This will happen when the demand is back in the market.