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Ahmedabad has witnessed the highest growth of 219 per cent in net office absorption in the first three quarters of calendar year 2014 year-on-year, as per the latest report by global real estate consulting firm Cushman & Wakefield. As against 356,590 sq ft of office space absorption in January to September period in 2013, Ahmedabad saw the net office uptake rise to 1,139,100 sq ft for the said period.
Total net absorption of office space across top eight cities including Mumbai, Delhi, Bengaluru and Chennai, among others, grew by 36 per cent at approximately 24 million sq ft (msf) between January - September in 2014 as against the 17.7 msf in same time in 2013.
"The office markets have seen a positive trend as the economic growth improved from all-time lows and business confidence strengthened. Companies have started to expand their operations and new leases and expansion now constitute 75% of the leasing activity in the country with relocations and consolidations witnessing a decline over last year. We will continue to see this positive momentum in the next 2-3 years with net absorption likely to outstrip new supply from the year 2016," said Sanjay Dutt, Executive Managing Director, South Asia, Cushman & Wakefield.
The rise in net absorption of office space in Ahmedabad is being attributed to increase in number of deals in the IT-ITeS and manufacturing sector. Other sectors that added to the increase in Ahmedabad were media and pharmaceuticals.
In Ahmedabad, total supply for the first three quarters of 2014 was recorded at 1.7 msf, a substantial increase of 74 per cent compared to same period last year as a number of developments that were deferred in the previous year became operational. Net absorption of 1.1 msf in the first three quarters of 2014 was due to new leases and pre-commitments measuring 400,000 sq ft that were taken up during the said period in Ahmedabad, the Cushman & Wakefield report stated.
Across various areas in the city, net absorption (in the first three quarters) was concentrated in Gandhinagar (36 per cent), Prahladnagar (35 per cent) and S.G. Highway (26 per cent). Transaction activity in 2014 was primarily driven by the IT-ITeS (49 per cent), BFSI (28 per cent) and manufacturing (13 per cent) sectors.
Meanwhile, although the average transaction size remained similar to last year same period at 12,000-15,000 sq ft, the increase in number of deals in the IT-ITeS and manufacturing sector led to the increase in net absorption. Further, with high levels of supply in Ahmedabad, vacancy levels increased by 4.6 percentage points to 18.5 per cent at the end of the third quarter. Given the high vacancy levels rentals in most submarkets have largely remained stable over the last year.
