Google takes 1.3 million sq ft of office space in Bengaluru on lease: Sources

Tech giant Google has leased 1.3 million sq ft of office space in Bengaluru, according people aware of the deal, marking one of the largest office lease transactions in the country since the pandemic began.

The California-headquartered company has entered into an agreement with Bagmane Developers for a new lease at its Bagmane Rio Business Park on Outer Ring Road, they told ET, adding that the property has a lease tenure of 15 years and is expected to be operational by the third quarter of 2022.

“Google will be paying Rs 85 per sq ft for the property. The property is under fitout and marks one of the largest deals signed so far,” they said.

ET’s email query to Google remained unanswered till the time of going to press.

Since the start of the pandemic, Google has taken up 2.8 million sq ft of office space in India, including flexible office space in Gurgaon.

The company has four offices in India, including its country headquarters in Hyderabad.

“Google is also exploring flexible offices across various cities to implement a hybrid work model,” said an industry source.

Occupiers and tenants of large office complexes across the country, including big corporations, are signing new leases or renewing their old lease agreements despite the much-talked-about emergence of the work-from-home option after the viral outbreak.

In the first six months of 2022, technology companies have driven leasing in India with a share of about 58%, followed by flexible space operators. Renewals and renegotiations continue to remain the preferred short-term portfolio strategies of occupiers.

Since the pandemic broke in 2020, AMD and BYJUs have signed over 5 lakh sq ft of office space each in Bengaluru. ANZ has taken up 6 lakh sq ft and consulting firm Deloitte over 7.5 lakh sq ft in the city.

“Bengaluru leads in Q2 with 30% of the total absorption, followed by Hyderabad and Chennai. For south Indian cities, the market orientation meter is moving from tenant-friendly to balanced,” said Arpit Mehrotra, MD (Bengaluru) Office Services, South India, Colliers. “Flex space demand is on the rise as many corporates are working on the capex light model and tech companies remain dominant in all southern cities. Vacancy levels have dropped in all southern cities.”

Leasing activity in the country is expected to strengthen further in the coming quarters because of a combination of pent-up demand and expansion / consolidation-led leasing as occupiers start to realign their post-pandemic business strategies.

The Indian IT industry continues to be the leading demand driver for office real estate.

In FY 2021, some 30 companies hired 360,000 freshers, of which 230000 were hired by India’s top five tech companies such as TCS, Infosys, Cognizant, HCL Tech, and Tech Mahindra.

This would translate into the absorption of over 18.5 million sq ft of office space in India.

Taking cues from H1 2022, the second half of the year is expected to witness increased momentum in office space pick-up.

In a recent report, Colliers India said office gross absorption across the top six cities saw almost a three-fold rise to 14.7 million sq ft during Q2 2022 compared with the same period last year.