In one of the largest real estate leasing transactions so far this year, Siemens Technology and Services has leased 727,000 sq ft in Electronic City, Bengaluru, three persons with direct knowledge of the development.
The subsidiary of German engineering conglomerate Siemens will pay a rent of Rs 80 per sq ft for the new office space at Gold Hill Excelsior business park, one of the persons said. The nine-year lease term will start from March next year. The rent will be increased 8% annually for the first two years and thereafter by 5% every year. The office can accommodate 7,000 employees and will be utilized to consolidate and expand Siemens Technology and Services’ operations in Bengaluru, the sources said.
The information technology and management services company currently have around 4,500 employees in Bengaluru. Siemens Technology and Services did not respond to ET’s emailed queries as of press time Tuesday. The company has offices in Bengaluru, Chennai, Gurgaon, Noida, and Pune.
Its research in digitalization and automation teams based out of Bengaluru focuses on affordable healthcare solutions, automation engineering, embedded systems, energy systems, software technologies, and water technologies. Following the sluggish leasing environment due to the outbreak of Covid-19, the office segment has started seeing some traction in the third quarter with Bengaluru, Mumbai and Delhi-NCR leading the activity.
“Office leasing has been more resilient than many had expected,” said Raja Seetharaman, director at real estate data solutions platform Propstack. “Many companies are consolidating their multiple offices into a single large office. This works well when companies follow a portfolio consolidation approach as well as a hub and spoke model. The leasing activity is also driven by an expected short supply of quality space in the near term due to delay in ongoing projects and lack of new projects,” he said.
Multinationals including Apple, WellsFargo, Google, Walmart, Amazon, and Microsoft have either leased or are in the process of leasing large office spaces across Bengaluru, Hyderabad, and Chennai for future growth. The total office transactions of the top eight Indian markets have improved and reached 33% of the 2019 quarterly average level during the September quarter, according to a Knight Frank report.
Bengaluru, Hyderabad, and Chennai have seen rentals inching upward by 0.5% to 4% during the quarter. However, rentals across bigger markets like Mumbai, NCR, Kolkata, and Ahmedabad have declined in the range of 1-6%, while Pune has seen flat growth.