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Indian office market has seen a 37% drop in absorption rate at 3.6 million square feet (msf) in the first quarter of this year, according to a report.
However, there was an increase of 18% in fresh supply at 7.9 msf this year against the same period last year, the report by global real estate consultants Cushman & Wakefield said.
The vacancy rates at the end of first quarter, 2013 stood at 19.6%, which is an increase of 3% from the same quarter last year. The highest net absorption was seen in Pune. Bengaluru and Chennai saw a significant decline in net absorption levels followed by Mumbai and Hyderabad.
Pune saw the highest net absorption of 8.4 msf followed by Mumbai and NCR which saw about 8.1 msf and 7.75 msf of net absorption during the quarter. Pre-commitments during the quarter were registered at about 5.15 msf, restricted only to Mumbai and Pune, the report added.
Sanjay Dutt, Executive Managing Director, South Asia, Cushman & Wakefield, said, “Given the current subdued economic conditions, most occupiers are cautious and have been concentrating on how to leverage current office supply to their advantage and reduce real estate cost from medium to long term perspective while simultaneously focusing on increasing the efficiency of their existing office spaces, alternate workplace strategy with remote or flexible work stations or hours.”
The developers on the other hand are looking for different strategies to promote lease and sale in a highly competitive environment. Some of the focus areas are branded office developments, while some are going back to strata sale and smaller units to attract investors or small and medium companies.
