Office space leasing fell 26% in Jan-Mar at 5 mn sq ft: CBRE

Almost 47% of the leasing activity in the quarter was concentrated in IT developmen

The first set of real estate numbers for the current year do not look good. Office space absorption for January-March 2016 fell 26 per cent from the corresponding period last year to about five million sq ft across seven major cities, as companies are yet to finalise real estate plans for the year, according to a report by CBRE. In the first three months of 2015, office space uptake was 6.8 million sq ft.

Following a strong December quarter, the January-March period is comparatively sluggish as most occupiers were still strategising their plans, with limited transaction decisions being implemented in the March quarter, the report said. In the December quarter, office space absorption was pegged at 12 million sq ft.

Corporate real estate space take-up during the March quarter was led by Delhi national capital region (NCR) at 31 per cent of total transacted space, followed by Mumbai at 23 per cent and Bengaluru at 17 per cent.

The seven cities are Delhi-NCR, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad and Pune.

“While the March quarter of the year traditionally witnesses muted transaction activity, the overall sentiment among India’s corporate space occupiers is optimistic,” said Anshuman Magazine, chairman and managing director of CBRE South Asia.

 

Almost 47 per cent of leasing activity in the quarter was concentrated in IT developments.

Corporate occupier interest remained concentrated towards prominent micro-markets such as Gurgaon, Thane, Navi Mumbai, Vikhroli, Goregaon and Andheri in Mumbai; Koramangla, Whitefield and Electronics City in Bengaluru; IT Corridor in Hyderabad, and Viman Nagar in Pune.

Leading SEZ properties in Chennai, Bengaluru, Gurgaon and Noida also witnessed considerable traction, accounting for 14 per cent of total activity.

In terms of supply, seven  million sq ft of new office space was completed in the quarter with smaller cities such as Kolkata, Hyderabad and Pune accounting for 68 per cent of the total supply released during the quarter.

Pune led project completion, generating about 25 per cent of the total supply released during the quarter across leading cities. Commercial (non-IT) projects accounted for half the overall supply that came on-stream in the first quarter of 2016.

“Sectors such as IT and banking are likely to remain the dominant demand drivers for office space, with manufacturing, e-commerce and pharmaceuticals being the other active sectors that are likely to generate demand for corporate real estate space. Occupiers are also likely to keep a strong check on space utilisation ratios and innovate on their workplace strategies. Demand for SEZ space and pre-commitments in projects nearing completion are expected to continue to improve in the coming months,” Ram Chandnani, managing director (transactions services) at CBRE South Asia.