Bengaluru’s sky-high office deposits make renting as costly as MBA fees, forcing startups to rethink buy vs rent

Bengaluru’s 10-month office rent deposits are pushing startups to rethink buy vs rent, as experts urge founders to separate business and personal finances

For many Bengaluru entrepreneurs, finding office space today feels like enrolling in an expensive MBA, except this one teaches survival, not strategy. With landlords demanding ₹10–15 lakh as a security deposit even for modest offices, the cost of renting can rival a year’s tuition at a business school, wealth advisors point out. Financial experts say this “startup squeeze” is now common among first-generation entrepreneurs who are juggling personal responsibilities, family expenses, and business ambitions.

For many Bengaluru entrepreneurs, renting office space feels like an expensive MBA in survival — with landlords demanding ₹10–15 lakh deposits, rivalling MBA school fees. (Representational Image) (Unsplash )

Entrepreneurs point out that the financial burden of renting commercial space in Bengaluru has reached unprecedented levels. Chandralekha M.R., a wealth advisor and founder of fintech startup Dime, recently shared her experience on LinkedIn, describing how landlords in the city are demanding steep deposits compared to other metros.

“In Delhi, you pay two months’ rent as a deposit. In Mumbai, it’s six. But in Bengaluru? Ten months!” she wrote. Chandralekha, who was scouting for a small office for her growing team in Bengaluru, said she was stunned when a landlord demanded a 10-month advance payment. “For a ₹50,000 monthly rent, that’s ₹5 lakh upfront; just to get the keys. My total outflow for the year? ₹11 lakh! I was born and raised here, but that number still felt unreal,” she said.

Office rents across Indian cities

According to Knight Frank’s APAC Office Highlights July-September 2025, Bengaluru prime rents in the Central Business District (CBD) touched ₹1,807 per sq. ft. per year, reflecting 2% quarterly and 8.8% annual growth. The city’s vacancy rate stood at 11.5%, among the lowest in major metros, and rents are projected to continue rising over the next 12 months.

In Mumbai’s Bandra Kurla Complex (BKC), prime office rents averaged ₹3,953 per sq. ft. per year, marking 2% QoQ and 3.9% YoY growth. Despite a relatively high 17.3% vacancy rate, rents in India’s financial capital are expected to remain stable in the coming quarters.

Meanwhile, Delhi-NCR’s Connaught Place reported the highest rents among the three major cities at ₹4,200 per sq. ft. per year, with 2% quarterly and 3% annual growth. The vacancy rate in the region stood at 12.5%, with Knight Frank projecting an unchanged rental outlook over the next year.

Buying vs renting: Weighing upfront costs and flexibility

According to Vimal Nadar, National Director and Head of Research at Colliers India, the decision between buying and renting a commercial space should be guided by the scale, liquidity, and long-term business objectives. “The buying versus rental proposition depends on several factors, upfront costs, periodic cash outflows, fit-out and maintenance expenses, and registration charges,” he said.

Purchasing an office space in Bengaluru involves a significant upfront investment, including registration and stamp duty charges, as well as the acquisition cost. There are also design and interior fit-out expenses to make the space business-ready. Renting, on the other hand, allows entrepreneurs to avoid these heavy initial costs. Lease agreements usually include a security deposit equivalent to 6–9 months of rent, which is interest-free, and a 5% annual escalation clause or a 10–15% hike every three years, experts said.

Nadar said startups and young firms are increasingly choosing flexible workspaces over traditional offices. “Fully managed offices, where costs are calculated on a per-seat basis, offer scalability and convenience. Entrepreneurs can expand or downsize based on business needs without the long-term financial burden of ownership,” he said.

Managing finances: Don’t mix personal and professional funds, experts say

Financial planner Suresh Sadagopan said one of the biggest mistakes new entrepreneurs make is blurring the line between personal and business finances. “Anyone starting a business should have at least two years of personal cash flow ready, covering EMIs, household expenses, and even a child’s education if applicable,” he said.

He cautioned that most people underestimate the amount of cash their business will consume in the early stages. “Expenses always turn out higher than expected, and revenues take longer to come in,” Sadagopan said. “Entrepreneurs must clearly calculate how much personal money will go into the business and how long they can sustain without income.”

For couples planning to start a business together, he advised against both partners quitting their jobs at the same time. “Ideally, one person should continue earning a steady income until the business stabilises, especially if there are dependents,” he said. “Business ventures are inherently risky. It’s wise for one partner to hold the fort while the other tests the waters.”

According to Sadagopan, entrepreneurs should also factor in the total cost of running a commercial space before taking the plunge. For instance, a small office renting at ₹2–3 lakh per month could result in total monthly outflows of ₹4-5 lakh, including electricity, maintenance, and other overheads. “Your income should comfortably exceed your rent and expenses,” he said. “Otherwise, the business will be perpetually under financial strain.”

Experts agree that while owning office space may create long-term value, renting or opting for managed offices offers critical flexibility in the volatile early years of entrepreneurship. As Sadagopan put it, “In business, survival is the real ROI, not just property returns.”