Triggered by increase in space owing to expansion of banking, finance, service and insurance (BSFI) sector
In most cities, absorption of office space continues to be on the decline. But, a few of the major cities are singing a different song altogether and have recorded a rise in consumption of office space.
Surprisingly, Mumbai is one of those which has recorded a growth in sales of office spaces, according to the real-estate consultancy firm Cushman and Wakefield.
Out of all the cities that recorded a rise in the sales of office space, Mumbai witnessed the highest rise in absorption level at 35 per cent.
This is primarily due to a significant increase in space necessitated by the expansion of banking, finance, service and insurance (BSFI) sectors. This included big deals ranging from 1,00,000 sq ft to 3,00,000 sq ft being registered in the city.
Together, Mumbai, Kolkata and Ahmedabad witnessed 35 per cent, 33.7 per cent and 5.6 per cent absorption levels respectively. In fact, there was a rise by 140 per cent in pre-commitments compared to the previous quarter and by 41 per cent compared to the same quarter last year.
Bengaluru recorded the highest pre-commitments of 2.9 million sqft (msf) followed by Delhi-NCR (0.45 msf) and Chennai (0.1 msf).
The first quarter of the 2012 noted absorption across top eight cities at 7 million sq ft registering a decline of 32 per cent over last quarter and 6 per cent over the same period last year.
Bengaluru noted the highest absorption at 2.45 msf, though lower than last quarter it was 17 per cent higher than the first quarter last year.
On the other hand, Delhi-NCR saw one of the lowest absorption level recorded at 0.55 msf, due to cautious approach of companies.
But, supply could well exceed demand in Mumbai, Delhi and Chennai, as they have a strong pipeline of under-construction inventory, while Bengaluru is expected to witness the strongest demand. It may be recalled that a little while earlier, newer office space hubs in Mumbai’s suburbs such as the Bandra-Kurla Complex (BKC) had witnessed rentals rising sharply.
Demand for office space in the region saw a bent toward information technology special economic zones, where rentals rose by about four per cent.’