Office Space Absorption

Commercial space absorption up 20% in July-Sept quarter

2:21 PM

Commercial space absorption up 20% in July-Sept quarter

Commercial office space absorption saw a robust 20 per cent increase in the July – September 2015 quarter, sustaining the improvement in market sentiments since the previous quarter, finds a CBRE’s India Office Market study, released on Monday. More than nine million sq ft of commercial space was taken up across the seven leading cities during the quarter, the report said.

Delhi-NCR emerged as the top corporate office destination in the country by accounting for 31 per cent of the total transacted space during the quarter. Within this, Gurgaon remained the most preferred destination for corporate occupiers, followed by Bangalore, with a share of 22 per cent of the total absorbed space and Chennai stood third with a share of 17 per cent. Mumbai, Pune and Hyderabad office markets also attracted healthy enquiries from corporate occupiers, but space take up remained low in these cities during Q3, 2015, the report pointed out.

According to CBRE, which reports on the status of Grade A office space across the country’s leading cities, continued demand for quality space led to a perceptible strengthening of corporate real estate absorption. This robust transaction activity was primarily driven by the space requirements of corporate firms in the IT/ITES sector, which accounted for about 50 per cent of the total space absorbed.

BFSI and e-commerce companies followed next in the order. Despite being third in the order, the e-commerce segment saw a drop in transactions with a share of just about 4 per cent in Q3, 2015, after registering a high share of 14 per cent in Q2, 2015.

“Industry sectors such as the IT/ITES and banking/financial services are likely to remain the major demand drivers for office space in our leading cities during forthcoming quarters as well. Going forward, other active industries that are expected to provide an impetus to demand for corporate real estate space are manufacturing, engineering, e-commerce, research & consulting and pharmaceuticals,” said Anshuman Magazine, CMD, CBRE South Asia Pvt Ltd.

“The real estate industry is seeing traction coming back in office space absorption. Some major transactions including the one by Google have taken place in Delhi NCR. Our properties too are doing very well,” says Rajeev Talwar, Co-CEO, DLF Ltd, India’s largest realty player.

“Actually, the various measures taken up by the Government of India and Reserve Bank of India has resulted in increased money flow into the country. And this robust increase in absorption of commercial space definitely indicates signals of economic upheaval,” Talwar added.

More than 10 million sq ft of fresh investment-grade office space was completed across key cities during the quarter, leading to a Q-o-Q rise of around 21 per cent and 44 per cent Y-o-Y basis. Bangalore led new supply addition of office space during the July – September period. In fact, overall office space supply addition in Q3, 2015 was the highest over the previous nine quarters, the report observed.

“The July – September period saw a strong infusion of new office space coming into the market. At the same time, some of the supply pipeline was pushed forward to the next few quarters. Most of this upcoming supply is concentrated in key micro-markets of the leading cities and we expect these projects to see some traction from pre-leasing activity in the coming quarters,” said Ram Chandnani, managing director – Transactions Services, CBRE South Asia Pvt Ltd.

- by D Govardan

Source : Financial Chronicle

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