The total absorption of office space fell by 29 per cent at 26.3 million sq ft in 2009 compared with the previous year on account of companies deferring their expansions plans to tide over economic slowdown, a study says.
According to a report by realty consultant Cushman & Wakefield (C&W), eight cities across the country this year witnessed significant fall in office space occupation, which stood at 37 million sq ft last year.
"The IT/ ITeS sector that accounts for majority of the commercial office space take up in the country adopted a conservative approach during slowdown which resulted in office space demand lagging behind supply," C&W Executive Director (Occupier Services) Sumit Rakshit said in a statement.
Various SEZ projects were also deferred with developers even undertaking de-notification of SEZ projects, he added.
C&W said supply of SEZ spaces dropped by 23 per cent at about 14.1 million sq ft, in which NCR accounted for the highest supply this year, followed by Chennai and Bangalore.
Rakshit, however, said demand for office space is likely to increase, mainly towards second half of 2010, with gradual revival in the economy, and as a result construction activity is also likely to gain pace in the midterm.
While total supply for 2010 is projected at about 59 million sq ft, only about 46-50 million sq ft can be expected to be delivered next year, the consultant said.
The C&W report pointed out that despite a 26 per cent drop in supply this year from an anticipated figure during the beginning of the year, the major cities recorded a supply of 51.88 million sq ft escalating the average vacancy levels to about 19 per cent.
"NCR (National Capital Region) witnessed a significant dip (56 per cent) in absorption from the last year, recording about 3.8 million sq ft this year," the report added.
Bangalore and Mumbai followed NCR with falls of 45 per cent and 38 per cent in total absorption of office space in 2009, C&W said.
However, Hyderabad, Kolkata, Pune and Ahmedabad witnessed growth in office space absorptions by 106 per cent, 98 per cent, 15 per cent and 6 per cent, respectively.
