Office space absorption may see a decline of 26% in 2013

With the on-going economic downturn, global real estate consultants Cushman & Wakefield (C&W) said office space absorption in top eight cities is expected to be a decline of 26 per cent to approximately 22.5 million square feet (MSF) in 2013 over 2012.

“This is largely due to the current economic slowdown which has made many companies defer their leasing requirements. However, going forward the trend in absorption is expected to pick up at a steady pace with 2015 with an expected absorption of 28 MSF,” the C&W report said.

The estimated demand for office space across the top eight Indian cities in the period of 2013 – 2017 is expected to be 132 million square feet (msf), said the report released at the annual Real Estate Investment publication titled ‘Decoding Realty: Changing Dynamics of Indian Real Estate’ in association with Global Real Estate Institute (GRI) at their annual India Summit 2013.

However, Sanjay Dutt, executive managing director, South Asia, Cushman & Wakefield said, “The office market is expected to remain attractive for occupiers with steady increase in absorption after a trend of decline in 2013. With the economy expecting more stability in the post-election phase from 2015, the absorption trend is also expected to pick pace especially in established markets of Bengaluru, Mumbai and NCR. We expect growth to set in from the second half of 2014 when an increase in leasing activities both on account of entry of new companies into the country, expansion of existing companies and indeed relocation and consolidation activities that are expected to continue.”

Bengaluru ranks the highest in total expected net absorption which is estimated to be approximately 32 MSF between 2013–17, followed by Mumbai (24 MSF) and NCR (23 MSF). Pune and Hyderabad ranked fourth and fifth respectively, are expected to record absorptions of approximately 14 MSF each while Chennai (ranked 6th) will see an absorption of approximately 11 MSF. Kolkata (ranked 7th) and Ahmedabad (ranked 8th) finished the survey with 7 MSF and 3 MSF of total absorption respectively.