In spite of slowdown, office space demand remains on the rise
Posted on: 26/Oct/2017 12:53:08 PM
A quarterly report from the realty consultant states that the office market demand remains high with more of investor activities, increased leasing demand from technology firms, uptick in leasing interest out of various occupiers like co-working, logistics, manufacturing, warehousing, and so on. In spite of the slowdown in economy, these kinds of office demand continue to be on the rise, says a report.
The report further states that the commercial real estate market will continue to be on track with same level of demand from occupiers. Across the country, there is about 90 million sq. ft. area each with different stages of construction. These will probably get constructed fully in another 3 years. In the micro markets such as Pune, Bengaluru, Chennai and Hyderabad, it is likely that the vacancy level will get reduced by 2 to 3 percent. The rate of commercial space may uptick by 2 to 3 percent in the following 3 years, the report adds.
In the third quarter, a whopping 10 million sq. ft. office space is leased out in India. This makes it to 28.9 million sq. ft. in the year on the whole. This is lesser by 1 percent as compared to the same period last year. By the end of this year, a total of 40 million sq. ft. would have got leased out.
The frontrunner in this sector is Bengaluru where over 31 percent of demand is seen. This is followed by National Capital Region with 25 percent, and then follows Chennai and Hyderabad each with 12 percent. Next are Mumbai, Pune and Kolkata each with 10 percent, 8 percent and 2 percent demand respectively.
A total of 39 percent of the space is occupied by technology occupiers. Banking and financial services and insurance occupy about 17 percent. The third quarter sees 7 percent share in the total volume. And there are signs of substantial growth with co-working operators. Due to uncertainty of occupiers regarding the likely manpower in the future, there is increasing popularity of co-working space.
In the third quarter, there is about 1.23 million sq. ft. gross absorption in Chennai and the city has reached a total of 3.25 million sq. ft of office leasing in 2017 so far. This is 7 percent higher than the absorption observed in the same period last year.
