Bengaluru Office Rents Expected to Rise by 5-7% in 2025, Driven by IT and AI Demand
The real estate market in Bengaluru is expected to see a 5-7% increase in office rents by 2025, primarily driven by high demand from the IT sector and AI research labs.
Bengaluru Office RentsIt SectorAi Research LabsFlex Office SpaceReal Estate MarketReal Estate NewsFeb 05, 2025
While Bengaluru has seen significant demand from global capability centres (GCCs) in the past year, the city is currently witnessing a notable uptick in demand from the IT sector and AI-driven research labs.
This surge can be attributed to the Indian government's push to set up these research labs.
Additionally, there has been a rise in queries from online gaming startups and pharmaceutical companies, which are expected to be game changers for the flex sector in 2025.
The mismatch between the demand for and supply of premium Grade A flex spaces has driven up input costs for many flex operators, especially in Bengaluru.
For instance, in prime locations in the central business district (CBD) areas, flex office space rentals have increased by 20% since last year.
Despite the rising costs, The Executive Centre is focusing on optimizing office rentals to improve operational efficiency.
A flex office space is a workspace where businesses can rent office space on short-term leases, allowing them to scale up or downsize as needed.
According to industry sources, the current flex office space rent in Bengaluru ranges from ₹6,000 per seat to ₹40,000 per seat.
Grade A developers offer seats in the range of ₹15,000 to ₹50,000 per seat, especially in areas close to IT corridors and CBD areas.
Khedia noted that the eastern IT corridor in Whitefield has seen a significant increase in demand for flex spaces over the past six months, particularly after the new metro line connecting parts of the IT corridor was operational.
The completed metro line links the western parts of Kengeri township and the eastern IT corridor to the central business district of MG Road.
However, there has also been a surge in queries about north Bengaluru in the last three months.
Many companies are planning to relocate their offices to the north, and new companies are launching their assets there.
Prime areas in the CBD, such as Outer Ring Road, are saturated, leading to a shift in major leasing activities towards the north.
The Executive Centre remains bullish on expansion in Whitefield and is exploring new opportunities in north Bengaluru.
The company plans to expand its flex office space portfolio in India by adding over 50 lakh square feet by the end of 2025.
The company aims to grow at more than 20% annually and is targeting larger spaces between 50,000 to 80,000 square feet.
This expansion will include six new centres in cities such as Chennai, Bengaluru, Hyderabad, Mumbai, Gurugram, and New Delhi.
The company's current portfolio is 1.5 million square feet, and it plans to double the footprint to 3 million square feet by 2027.
In the last year, The Executive Centre invested over ₹47 crore in southern Indian cities like Chennai, Bengaluru, and Hyderabad; ₹42 crore in Gurgaon and New Delhi; and ₹33 crore in Mumbai and Pune.
For 2025, the company expects similar investment levels, with southern India accounting for 30% of the overall portfolio share.
Frequently Asked Questions
What factors are driving the increase in office rents in Bengaluru?
The increase in office rents in Bengaluru is primarily driven by high demand from the IT sector and AI research labs, as well as a significant push from the Indian government to set up these research labs.
How much are flex office space rentals in Bengaluru expected to increase by 2025?
Flex office space rentals in Bengaluru are expected to increase by 5-7% by 2025.
Which areas in Bengaluru are seeing the highest demand for flex office spaces?
The eastern IT corridor in Whitefield and north Bengaluru are seeing the highest demand for flex office spaces. The new metro line connecting the IT corridor to the CBD has also contributed to this demand.
What is The Executive Centre's expansion plan in India?
The Executive Centre plans to expand its flex office space portfolio in India by adding over 50 lakh square feet by the end of 2025, with a focus on larger spaces and new centres in cities like Chennai, Bengaluru, Hyderabad, Mumbai, Gurugram, and New Delhi.
What is the current range of flex office space rent in Bengaluru?
The current flex office space rent in Bengaluru ranges from ₹6,000 per seat to ₹40,000 per seat, with Grade A developers offering seats in the range of ₹15,000 to ₹50,000 per seat, especially in areas close to IT corridors and CBD areas.
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