The office space market has witnessed a decline in absorption as well as supply. The total net absorption in the first half of 2017 (January–June 2017) closed at a deficit of 11 per cent from the same time last year and was recorded at 12.5 million sq ft (msf).
According to a report by Cushman & Wakefield, Chennai was the only city to see positive trends in net absorption as well as supply. Of the total net absorption in H1 2017, over nearly 57 per cent was recorded in the second quarter of 2017 (April – June 2017).
Leasing activityTapering supply has largely been responsible for the slowdown of net absorption in 2017, though there are some active enquiries by occupiers for consolidation/relocation of their office spaces hinting towards a healthy leasing activity by the end of the year.
Anshul Jain, MD, Cushman & Wakefield, said, “Leasing activity has gathered pace in the second quarter owing to large transactions by IT-BPM and BFSI occupiers. Despite headwinds and cautious stance by IT-BPM occupiers, the IT-BPM sector continues to be the primary demand driver. Limited available of quality supply has encouraged occupiers to pre-commit office spaces resulting in a significant increase of about three times in such activity; primarily driven by IT-BPM and healthcare sectors in Hyderabad, Gurgaon and Bengaluru.” Supply for the first half of the year recorded a decline of close to 50 per cent as compared to last year with almost all markets experiencing a slowdown.
Jain said, “As the dust settles on the geo-political and economic upheavals across the world along with some ground changes such as increased supply of office space, we are expected to see a healthy net absorption of close 32–35 msf by the end of the year. Further with a pre-commitments of close to 6 msf, we can expect the momentum of absorption to continue.”