Office space leasing in NCR declines 57% in first quarter '15

Overall in the top eight cities net office space leasing grew by 35%

Delhi-NCR saw a 57% decline in the office space absorption in the first quarter this year due to delay in decision making by corporates, according to a report.

The net absorption in the office space in Delhi-NCR came down to 6.26 lakh sq ft during January-March quarter this year from 14.61 lakh sq ft in the year-ago period, according to the report by real estate consultant Cushman & Wakefield.

Overall, the the net office space leasing in India's in top eight cities (Ahmedabad, Bengaluru, Chennai, Delhi-NCR, Hyderabad, Kolkata, Mumbai and Pune) grew by 35% to 7.97 million sq ft in January-March 2015 from 5.91 million sq ft in the year-ago period.

"NCR has registered a significant decline in office space net absorption at 60% in Q1 2015 as against the same time last year, largely due to the result of some delays in decision making as demand still remains strong from occupiers given that a number of transactions are in the pipeline," Cushman & Wakefield said in a statement.

However, it is expected to pick up on strong demand in the coming quarters.

Chennai and Bengaluru saw the highest increase in net absorption as demand from IT-ITES companies remain strongest for the southern cities in the improving business environment, it said.

Bengaluru witnessed over six-fold jump in the absorption of office space at 3.2 million sq ft during January-March period of 2015 from mere 5,31,000 sq ft in the same period last year. Other markets that saw significant decline in net absorption were Ahmedabad (-75%) and Hyderabad (-37%).

On supply front, there was a decline of 2% in the first quarter of 2015 at 7.4 million sq ft from the year-ago period.

Cushman & Wakefield South Asia Executive Managing Director Sanjay Dutt said,"We expect to see a growth in the office space absorption of about 15% by the end of 2015. On this basis the same, we expect total net absorption to be recorded between 36 -37 million sq ft at the end of 2015, majority of the demand coming from the IT/ITeS and the BFSI sector in key markets of Bangalore, Delhi-NCR and Mumbai".

Net absorption/net leasing refers to the new/additional occupation activity and includes only the incremental new space take-up in instances of relocations and expansion from within the city. It does not include lease renewals and relocations to same sized office spaces.