Office absorption down 15% to 16.2 msf in first 3 quarters this year

NCR, Kolkata post highest decline in country; only Chennai and Pune record positive growth

The net office absorption across top eight Indian cities has declined by 15 per cent at 16.2 million square feet during the first three quarters this year.

During 2013, Mumbai recorded the highest overall net absorption of 3.57 msf in all grades followed by Bengaluru and Pune at 3.04 and 2.99 msf respectively, according to a report by Cushman and Wakefield.

Mumbai and Bengaluru saw a decline of 28 per cent and 7 per cent in overall net absorption compared to the first three quarters of 2012. Chennai and Pune were the only cities to record a positive growth of 4 per cent and 56 per cent respectively in net absorption in the first three quarters of 2013 compared to same period last year. Both NCR with 1.80 msf and Kolkata with 0.67 msf registered the highest decline of 41 per cent each in overall net absorption followed by Ahmedabad with 0.35 msf recording a 37 per cent drop .

Slower economic growth has led to the decline in expansion by companies as cautious sentiments have continued since the beginning of the year. The second quarter had seen a marked improvement in overall office space net absorption due to expected improvement in growth and productivity, it declined in the third quarter, the report added.

However, the past few quarters have seen an increasing trend of relocation amongst companies. Also, in the tough economic conditions, many companies have consolidated their multiple offices, spread across the city, to a single large office to maximize operational efficiencies.

Bengaluru, Chennai and Mumbai dominated the total volume of leasing activity. The new supply for the first three quarters also declined by 16 per cent at 24.3 msf.

Sanjay Dutt, Executive Managing Director, South Asia, Cushman & Wakefield said, “The growth in leasing was dampened in the third quarter primarily due to continuing negative market sentiments as a number of companies continued to delay their investment and expansion plans given the recent downslide in the Rupee’s value, current US federal government policies and stubborn inflation.”