Office space absorption up 9 pc during 2013 in top 7 cities

Office space absorption rose by 9 per cent to 28 million sq ft during 2013 in the country's top seven cities helped by few big-ticket transactions during last two months, according to property consultant CBRE.
Absorption stood at 25.62 million sq ft during 2012 in 7 cities -- Delhi NCR, Mumbai, Bangalore, Chennai, Hyderabad, Pune and Kolkata.
According to the CBRE's report, office space absorption in the top seven cities grew by about 35 per cent in the fourth quarter of 2013 at around 8.2 million sq ft as compared with around 6 million sq ft in the previous quarter.

In Delhi-NCR region, absorption grew by about 14 per cent at around 1.7 million sq ft in the fourth quarter of 2013 as compared to around 1.5 million sq ft in the previous quarter.
"With the fourth quarter registering around 8.2 million sq ft of space take-up, the total office space absorption for the entire year stood at about 28 million sq ft - an appreciation of over 9 per cent year-on-year," CBRE said in a statement.
Transaction activity was mostly led by office leasing in Bangalore, Delhi NCR and Mumbai, while smaller cities such as Chennai and Hyderabad saw stagnation in their transaction market shares compared to last year.

"A couple of big ticket transactions were closed in the city in the past two months, led by corporates belonging to diverse sectors such as IT/ITeS, banking/financial services, manufacturing, pharmaceuticals, amongst others.

"This has contributed to the overall increase in absorption for Q4 2013 when compared to Q3 2013 as well as an overall y-o-y increase in absorption when compared to 2012," CBRE South Asia Pvt Ltd Chairman and Managing Director Anshuman Magazine said in a statement.
The consultant noted that there was an increased occupier interest in SEZ space, with large space commitments witnessed in Delhi NCR, Bangalore and Hyderabad.

"Going forward, demand is most likely to be concentrated in peripheral micro-markets of India's leading cities, owing to the abundant availability of cost-effective Grade A office space options," Magazine said.
Occupiers belonging to the IT/ITeS, banking/financial services and pharma sectors are likely to drive the demand for office space and contribute significantly to overall office space absorption levels, he added.
CBRE anticipates that supply backlogs are likely to exert pressure on rentals across most micro-markets in the short to medium term.
"Commercial leasing activity is likely to witness a gradual uplift in the initial months of 2014 as a slow economic recovery guides occupier interest towards hiring and space expansion," CBRE said.

"Till the outcome of the national elections and India's economic performance it would be difficult to forecast how the real estate market will fare in the latter part of 2014," Magazine said.