Bengaluru Office Rents may Rise 5-7% in 2025 Amid IT and AI Demand

07 Feb 2025 CW Team

Bengaluru’s office rental market is set to experience a 5-7 per cent increase in 2025, driven by growing demand from the IT sector and AI-driven research labs. The city's office space requirements have been steadily rising, particularly with the expansion of global capability centres (GCCs) in recent years. This trend has now been further fuelled by increased interest from technology firms and research institutions specialising in artificial intelligence.

The Indian government’s push to establish AI research labs has contributed significantly to this demand. Additionally, sectors such as online gaming startups and pharmaceuticals are showing strong interest in flexible workspaces, positioning them as key drivers for the flex office sector in the coming year.

However, the gap between supply and demand for premium Grade A flexible office spaces has led to increased input costs for several operators, particularly in Bengaluru. Prime locations within the city’s central business district have already witnessed a 20 per cent surge in rental prices over the past year. The rising operational costs have further pressured workspace providers to optimize office rentals while maintaining operational efficiency.

As businesses continue to prioritize flexible workspaces, the sector is expected to evolve with more cost-effective and innovative solutions to meet the growing demand. The increasing presence of AI research, IT firms, and emerging industries is likely to shape Bengaluru’s commercial real estate landscape, solidifying its position as a leading hub for technology-driven enterprises.

News source: The New Indian Express

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