January-March office space demand soars 19%
Demand for office space rose 19 per cent to 11.7 million sq ft in eight major cities during the first quarter this year, according to property consultant Cushman & Wakefield. "Following a strong fourth quarter, the overall office demand in the first quarter of 2016 increased by 19% to 11.7 msf (million sq ft) across the top eight cities backed by high pre-commitments, as compared to the corresponding quarter last year," C&W said in a statement.
The eight cities include Delhi-NCR, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad. Net absorption level remained sluggish due to delayed decision making by the Indian companies. However, the two southern cities of Bengaluru and Hyderabad bucked the trend by registering strong uptake of space.
"Pre-commitments more than doubled compared to same quarter last year and were noted at 4.6 msf, representing 40 per cent of the total demand," it said. In order to sync real estate requirements with business growth strategy, a number of companies have committed space foreseeing limited availability of upcoming quality stock in select markets. Delhi-NCR witnessed a drop in demand by 10 per cent to 0.7 msf in the thirst quarter of this year. C&W MD (NCR) Manish Aggarwal said: "Demand declined as occupiers continue to consolidate their real estate footprint in the region." Bengaluru and Hyderabad accounted for a chunk of the total demand at about 72 per cent on the back of strong activity from companies in the IT-ITES sector, which expanded their footprint.
Bengaluru witnessed demand of 6.1 msf, a rise of 47 per cent, from the year-ago quarter. The supply across the eight cities witnessed a huge surge of 41 per cent to 11.1 msf, majority of which was noted in Bengaluru, followed by Delhi-NCR and Hyderabad. Despite high infusion of supply and comparatively lower absorption, the overall vacancy across eight cities was seen at 17.12 per cent at the end of first quarter of 2016, the lowest vacancy level in 10 quarters.