Few takers for office space in 2012

Bindu D. Menon | Updated on March 12, 2018 Published on April 07, 2012

Sluggish demand was seen from the IT and banking and finance sectors.

Industry watchers say low demand, high interest rates and less clarity on long-term prospects could be the reasons.

There are very few takers for office space, even for ready-for-fit-outs. A key reason for this is sluggish demand from the IT and banking and finance sectors. Industry watchers say high interest rates and want of clarity on Special Economic Zones' long-term prospects could be the added reasons.


Only 4.1 million square feet were absorbed in the first quarter of 2012, as compared to 6 million in that period last year, according to CBRE. “Absorption of office space is largely led by the IT/ITeS sector. However, most leasing activity by these companies was for smaller space. Preference for expansion in early 2011 has given way to consolidation and the average transacted floor plate stood at 20,000 square feet in the first quarter of 2012,” Mr Anshuman Magazine, Chairman and MD, CBRE South Asia, said.

The National Capital Region, Mumbai, Chennai, and Bangalore accounted for more than 70 per cent of the space getting absorbed. Supply continued to overtake demand in the first quarter of 2012, with almost 5.9 million square feet of office space being added across the leading cities, largely in NCR, Bangalore, Mumbai and Chennai.


Accumulation of stock across most office micro-markets led to values coming under some downward pressure in Q1 2012. The IT SEZ segment might lose its attractiveness among occupiers due to want of clarity on tax-related incentives. According to Mr Kejal Mehta, Research Analyst-Institutional Equities, Prabhudas Lilladher, in February 2012, sales registrations were down 11 per cent on a year-on-year basis to 4,203. Sales registrations continue to remain weak, hovering at Rs 4000-4500 levels.

Data from research firm DTZ said sales registrations were down 11 per cent year-on-year at 4,203, while lease registrations moved up 6 per cent on Y-o-Y to 8,515. For Q1 2012, a cumulative take-up across India's seven largest cities dropped by 14 per cent quarter-on-quarter, in Q1 2012. During the quarter, demand was the highest in Bangalore at 3.6 million square feet, followed by Mumbai at 1.2 million square feet.

Mr Anshul Jain, CEO, DTZ, said, “Policy paralysis is taking a toll on the real estate sector. The Government is yet to offer long-term clarity on SEZ operations. The Budget and RBI's Monetary Policy have also not been encouraging. Occupiers are holding on to their decisions to take up commercial ‘A' grade office space, and are likely to continue with their present stance till the third quarter of this fiscal. Rentals will remain stable or increase marginally.” The company said it expects a turnaround sometime around October as liquidity situation may ease a little.

Published on April 07, 2012

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.