City records high office-space vacancy, Salt Lake sees max space transactions
Kolkata: City’s office-space vacancy continues to be the second highest amongst the vacancies recorded across India’s top eight markets with little hope for rents witnessing an upward revision in 2023 while the Salt Lake business district continues to dominate with 85 per cent of space transactions in H2 2022, according to a recently published study’s report.
Compiled by the real estate consultancy firm Knight Frank, the report revealed that in H2 2022, Kolkata noted zero office space completions. No new office supply came on the block as the city struggled with high vacancy levels of above 40 per cent for more than four years now.
The report stated: “This has led developers to recalibrate their plans for office space construction as the lack of a demand driver for office spaces has kept leasing limited, acting as an impediment to the creation of new office stock.”
However, the report also said that the peripheral business district of Salt Lake City (PBD-1) dominated the occupier interest during H2 2022, as an overwhelming 85 per cent of the space transacted during the period operated within this business district.
The report mentioned: “Suburban Business district (SBD)-2 Rashbehari Connector continues to be a key micro-market with 6 per cent of the office space transacted, and located here. Central Business District (CBD), Off CBD and PBD-2 Rajarhat New Town accounted for 5 per cent and 4 per cent of the office space demand, respectively”.
In terms of the office space demand by different sectors, the Information Technology (IT) sector witnessed an expansion in share from 21 per cent in H2 2021 to 27 per cent in H2 2022. The IT sector’s share in Kolkata has grown despite the deferment of expansion plans by some players. Along with a hybrid work mode strategy, the IT sector occupiers continued to lease new office spaces to establish their office space footprint, it said.
Though smaller office spaces were leased by occupiers from the manufacturing sector, its share in H2 2022 stood at 13 per cent as no large spaces were leased. Co-working, accounting for 17 per cent of the city’s office transactions volume in H2 2021, witnessed a sharp decline to 8 per cent in H2 2022. Kolkata recorded 41.9 per cent of office space vacancies at the end of 2022. Despite a 112 basis point decline in the past year and a 42 per cent YoY uptrend in office space leasing, 2022 ended on a high vacancy note for Kolkata’s office market.
If new office completions are tightened in 2023, the increase in office space vacancy may remain restricted, the study revealed.
