Absorption of office spaces drops 51% in September quarter

Net absorption of office spaces has come down to 5.4 mn sq ft in July-Sept quarter

The net absorption of office space in the country’s top eight cities has reduced to half in the September quarter from the same time a year ago, according to Cushman & Wakefield.

The absorption of office space has come down to 5.4 million sq ft in July-September this year from 11 million sq ft in the corresponding quarter of 2014-15.

“Lack of quality ready-space in key micro-markets at desirable prices has led to many corporations delaying their leasing plans, despite the overall sentiment for business remaining positive, Cushman & Wakefield said. Mumbai saw the highest drop in net absorption at 124 per cent, followed by Bengaluru’s 84 per cent, it said. Hyderabad saw a rise in absorption of 129 per cent, it added.

Pre-commitment for future supply of office space rose 75 per cent, year-on-year, to 4.7 million sq ft, driven by Mumbai, it said.

“An increase in pre-commitments can be seen as a sign of changing real estate cycles. With demand overtaking supply in Mumbai and Chennai, these markets have seen low activity on account of higher supply,” said Sanjay Dutt, executive managing director, India, Cushman & Wakefield.

Mumbai, which previously fed demand from sectors like finance, media and consulting, saw fresh demand from information technology industry. There was a paucity of office space at the right price, leading to high pre-commitments from the infotech industry, Cushman & Wakefield said.