Office space absorption falls 10% QoQ in 2014

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With the corporate sector focused on improving space utilisation or relocation to peripheral markets, office space absorption during the first three months of 2014 remained subdued at about 6.3 million sqft office, with NCR, Bangalore and Chennai accounting for 70 per cent of it.

About 6.6 million sq ft office space was completed during the quarter of 2014, a decline of about 10 per cent on QoQ basis. Bangalore NCR and Mumbai accounted for more than 80 per cent of the total supply, according to India Office Marketview Q1 2014 report by research and consulting player CBRE.

SEZ developments in Gurgaon, Bangalore, Hyderabad and Pune witnessed traction during the quarter.

Rentals values in the central business districts of Delhi, Bangalore, Chennai and Pune appreciated two to five per cent due to occupier interest in Grade A properties. Rentals dipped 2-5 per cent in Mumbai due to feeble demand. Hyderabad and Kolkata has seen stability in rentals, it said.

“Going forward, occupiers are likely to remain focused on cost-saving strategies. Demand is likely to be in the peripheral micro-markets due to abundant availability of cost-effective quality space options,” said Anshuman Magazine, chairman and managing director, CBRE South Asia.

IT/ITeS, financial and pharmaceutical sectors would remain the major contributors to overall office space absorption. Rental values would be range bound as supply is expected to improve due to completion of projects, the report said.

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