A`bad sees lowest office space vacancy in H1 of 2012

In the latest office market report from real estate consultancy Cushman & Wakefield, Ahmedabad has witnessed the lowest vacancy rates in office space among the top eight companies. As against double digit figures of vacancy rates in Mumbai, NCR, Chennai, Bangalore, Hyderabad, Kolkata and Pune, Ahmedabad posted vacancy rate of 9.7 per cent in the second quarter of 2012.

Moreover, Ahmedabad recorded a total absorption of 440,000 sq ft during the second half of the year which is significantly higher compared to 230,000 sq ft in first half of 2011.

In terms of localities, SG Highway contributed 53 per cent of the total absorption for the first half of the year, while Satellite Road contributed to 26 per cent of the absorption in 2012. These locations have emerged as the preferred commercial districts on account of favourable infrastructure facilities.

"The absorption for commercial office space in Ahmedabad has been largely driven by the small and medium enterprises in the engineering and pharmaceutical sectors. Also it is expected that the space absorption is likely to remain stable in the next quarter with BFSI and small scale industries expected to be the key demand drivers," said Sanjay Dutt, executive managing director, South Asia, Cushman & Wakefield.

In terms of supply, Ahmedabad saw minor additions of approximate 500,000 sq.ft. during the first half of 2012. However, the supply additions were better compared to mere 100,000 sq ft in first half of 2011.

Nationally, the first half of the 2012 recorded total absorption of approximately 13.4 million sq ft of office spaces registering a decline of 21 per cent compared to same period last year which was 16.9 million sq ft. Among the top eight cities in the country, Bangalore witnessed the highest absorption in first half of 2012 at 3.01 million sq ft followed by Mumbai with 2.78 million sq ft.

NCR, on the other hand, saw the highest decline of 53 per cent in absorption in the first half of the year compared to same period last year. It recorded absorption of 1.35 million sq ft vis-a-vis 2.9 msf in first half of 2011. Bengaluru also saw a significant slowdown of nearly 46 per cent over first half last year even though it registered the highest quantum of absorption, while Chennai recorded a slowdown of 12 per cent.

According to the report, the slowdown in demand is due to cautious expansion plans from IT/ITeS sector as majority of demand in these cities is driven by the sector.