India’s largest ecommerce portal has just inked India’s largest office space deal in Bangalore. 3 million square feet of office space in Bangalore would now be used by Flipkart to house its ever-burgeoning staff.
Flipkart has chosen Bangalore based Embassy Office Parks, which is a joint venture between Embassy Group and Blackstone for building their sprawling office campus in the heart of Bangalore. As per reports coming in, the first phase of delivery will commence within 24 months, as a plug and play model based office space of approximately 1.5 million square feet would start operations at Embassy Tech Village on the Outer Ring Road in Bangalore by the end of January 2017.
Around 2500 employees of Flipkart are expected to use this space initially. Embassy Tech Village is a 105 acre plush property in the Outer Ring Road in Bangalore, which is part of the IT corridor planned by the government.
This area is well connected with the IT hubs of Bangalore: Whitefield and Electronic City, making it one of the most desired office space for any technology based company. This office property already boasts of names such as Sony, Nokia, Brocade, Cisco, Geometric, Blue Ocean, Talisma, Amba, Ness, Autonomy, Creative, Iron Mountain and Outsource Partners International.
The deal has been finalized at a rate of Rs 85 per square feet, and Flipkart has agreed to pay Rs 3000 crore as rental for the next 10 years from the time of delivery. Hence, Rs 300 crore per year would be the rental overhead to be borne by Flipkart from 2017 onwards. 3 million square feet of office space can easily accommodate 10,000 – 12,000 employees.
Jones Lang LaSalle (JLL) were the financial advisors of this giant real estate deal.
Juggy Marwaha, managing director, south India for JLL said, “In a process that took over one year of stringent due diligence and shortlisting of options, JLL aligned the rapid business growth of Flipkart alongside the diminishing supply position of Bangalore and yet managed to have a win-win deal for both Embassy and Flipkart,”
Jitu Virwani, CMD of Embassy Group, said, “We are delighted to have Flipkart as our tenant at the Embassy TechVillage and are looking forward to having a long-standing relationship with them.”
Flipkart has not issued any comment on this historic real estate deal.
India’s Office Real Estate Is Expanding: Stable Government Effect?
Flipkart, which is sitting on a war-chest of $1 billion+ funding from venture capitalists must have taken this big bet of leasing 3 million square feet of office space based on the promises of a stable government at the center. Not only ecommerce, but other IT companies have also inked some large scale real estate deals in the past couple of months, ever since the new government has been established.
TCS has already finalized a office space measuring little less than a million square feet in Noida for it’s biggest Indian campus. Accenture is already hunting for 1 million+ square feet office space in Bangalore, and American financial services firm Wells Fargo is also reportedly looking to lease 1.2 million sq ft in the Chennai.
As per real estate data, September quarter in 2014 saw more than 8 million square feet of office space being rented/sold, which is 31% more than the same period last year.
Clearly good governance and a promise of investor friendly environment in the Indian corporate sector has helped these companies to make data-based predictions of growth for the next decade, and this is certainly a good sign for the Indian economy.
Good to see, Indian startups are making big name
As mentioned in the post, the rent for 3M sq feet area for a year would be Rs 300 crores. The rent per square feet is given as Rs 85. So, the calculations are not matching according to the given data. Can you please confirm if its Rs 85/ sq feet or Rs 850/ sq feet.