A'bad records 90% rise in office absorption in Q1 2013

With companies in various sectors expanding and relocating their operations in Ahmedabad, the net absorption of office space in the city rose by close to 90 per cent in the first quarter of 2013 as compared to first quarter of 2012.

As per the latest report by global real estate consultants, Cushman & Wakefield, Ahmedabad registered net absorption of 189,555 sq ft for the first quarter of 2013 as against over 100,000 sq ft for the said quarter of last calendar year 2012.

"Some companies expanded and relocated their operations to better quality spaces offering attractive rentals. Pharmaceutical companies had a share of close to 26% in overall absorption followed by trading companies," the consulting firm stated in the report. The absorption during the quarter was evenly distributed in Prahladnagar and SG Highway. "Companies that relocated, restricted space uptake to either the same size as they vacated or only marginally more than the last space occupied, thus contributing to net absorption in limited amount. Many corporate houses expressed interest in leasing larger space, but have postponed their decision for the later part of the year. Thus going forward, the transaction activities are expected to pick up with some bigger requirements anticipated to get finalized," Sanjay Dutt, executive managing director, South Asia, Cushman & Wakefield.

As per the report, supply of Grade A space during the quarter stood at 866,000 sq ft, a substantial increase compared to the first quarter of 2012, which had no supply. Additionally, 80,000 sq ft of Grade B space also became operational at Prahladnagar.

The first commercial tower at GIFT city admeasuring 700,000 sq ft became operational during the quarter.

The large quantum of Grade A supply has resulted in vacancy levels increasing to 34.5 per cent. This has resulted in rental values in SG Highway and Prahladnagar declining by 6 per cent and 3 per cent, respectively.