Tag Archives: Office occupancy

26% drop in office space absorption in Q1 2016

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Bottom Line: Following a strong fourth quarter of 2015, the first quarter of 2016 was sluggish as most corporate space occupiers were still strategizing their real estate plans for the year. 

Office Space, Commercial Real Estate, Office occupancy, Indian property market, India real estate market, Indian realty news, Track2Media Research, Track2RealtyApproximately 5 million sq. ft. of prime office space was absorbed during Q1, 2016 (Jan – March) – a drop of approximately 26% year-on-year – according to CBRE’s India Office Market View – Q1, 2016 report.

According to the report, corporate real estate space take-up during the quarter was led by Delhi National Capital Region (NCR) with a share of 31% of total transacted space in the leading cities, followed by Mumbai (23%) and Bangalore (17%).

Corporate occupier interest remained concentrated towards prominent micro-markets such as Gurgaon in Delhi NCR; Thane, Navi Mumbai, Vikhroli, Goregaon and Andheri in Mumbai; Koramangla, Whitefield and Electronic City in Bangalore; IT Corridor in Hyderabad; and Viman Nagar in Pune.

Occupiers were also seen pre-committing space in under-construction developments, primarily in Mumbai and Gurgaon, largely led by the lack of available space in investment-grade developments at prime locations.

Commenting on the findings of the report, Anshuman Magazine, CMD, CBRE South Asia said, “While the first quarter of the year traditionally witnesses muted transaction activity, the overall sentiment among India’s corporate space occupiers is optimistic. Besides, India continues to remain one of the global key outsourcing destinations which will improve the momentum going forward.”

Almost 47% of the leasing activity in the quarter was concentrated in IT developments. Leading SEZ properties in Chennai, Bangalore, Gurgaon and Noida also witnessed considerable traction, accounting for about 14% of total transaction activity. Most SEZ transactions were the culmination of pre-commitments made by corporate occupiers in previous quarters for their office requirements.

In terms of supply, approximately 7 million sq. ft. of new office space was completed in the quarter with smaller cities such as Kolkata, Hyderabad and Pune accounting for about 68% of the total supply released during the quarter. Pune led project completions, generating about 25% of the total supply released during the quarter across leading cities. Commercial (non-IT) projects accounted for about half of the overall supply that came on-stream in Q1 2016.

“Industry sectors such as IT/ITeS and banking / financial services are likely to remain the dominant demand drivers for office space in the country, with manufacturing / engineering, e-Commerce, and pharmaceuticals being the other active sectors that are likely to generate demand for corporate real estate space. Occupiers are also likely to keep a strong check on space utilization ratios and innovate on their workplace strategies. Demand for SEZ space and pre-commitments in projects nearing completion are expected to continue to improve in the coming months,” said Ram Chandnani, Managing Director – Transactions Services, CBRE South Asia.

Increased occupier demand in quality IT and IT SEZ projects in Malad/Goregaon in Mumbai; DLF Cybercity in Gurgaon; Noida Expressway in Noida; Guindy, Velacherry, Perungudi, Mount Ponnamalle Road and Taramani in Chennai; Aundh Baner, Viman Nagar, Hinjewadi and Kharadi in Pune; and IT and Extended IT Corridors in Hyderabad, resulted in a q-o-q rental appreciation of 2–10% across these micro-markets.

Office space absorption rises to 30 million sq ft till September: Colliers

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Office Space, Commercial Real Estate, Office occupancy, Indian property market, India real estate market, Indian realty news, Track2Media Research, Track2RealtyOffice space take-up by corporates in the first nine months of the 2015 calendar year rose to 30 million sq ft, 11% more than 27 million sq ft in the same period last year, according to a new report by property consultancy Colliers International.

The consultancy anticipates the momentum to continue in the coming quarters.

“With a number of deals at advance stages, we anticipate momentum in office market to continue. Cities like Bengaluru, Gurgaon and Mumbai is set to witness maximum office uptake in the coming quarter,” said Surabhi Arora, associate director – research at Colliers India.

Corporates leased around 10.6 million sq ft of office space in the September quarter this year, a marginal rise from 10.5 million sq ft in the previous quarter.

Gurgaon marched ahead of Bengaluru and Mumbai in terms of office absorption, accounting for 23% of the total space absorbed across India in the September quarter, followed by Chennai at 20%, Bengaluru at 18%, Mumbai at 15%, Noida at 11%, Pune at 9%, Delhi at 4% and Kolkata grabbing 2% share.

Gurgaon witnessed an 18% QoQ rise in office absorption to 2.1 million sq ft in the September 2015 quarter, totalling to about 4.9 million sq ft till September this year, backed by demand from the IT/ITeS sector, which grabbed 60% share. The banking and financial services industry followed with 20%.

NH 8 (National Highway 8) remained the most preferred micro market in Gurgaon, sharing about 29% of total office absorption, followed by Golf Course Road 25% and Udyog Vihar 21%.

“Due to location advantages and affordable rents, micro markets like Udyog Vihar, institutional sectors and NH8 will continue to garner the occupiers’ interest,” Arora said.

Mumbai recorded a total of 5.95 million sq ft of office space absorbed till September this year, with about 1.4 million sq ft leased in the September quarter. Bandra Kurla Complex (BKC) remained the most preferred location with 32% of total office absorption, followed by Western Suburbs (Dadar, Goregaon, Andheri and Jogeshwari) at 28% and Central Mumbai (Worli, Dadar, Lower Parel) at 17%.

Bengaluru recorded 1.6 million sq ft of office absorption in the September quarter, taking the total to over 8 million sq ft in the first nine months this year. IT/ITeS companies leased 56% of the office space in the September quarter, followed by manufacturing at 16% and BFSI at 10%.

While cities like Chennai, Delhi and Noida recorded a rise in office absorption in the September quarter to 1.82 million sq ft, 0.33 million sq ft and 0.98 million sq ft, respectively, Pune and Kolkata witnessed a drop of 55% and 30% to 0.83 million sq ft and 0.2 million sq ft, respectively.