MUMBAI: The total net office space absorption recorded a 25 per cent decline across top eight cities over the last year at 23 million square feet (msf), according to the annual estimations by global real estate consultancy Cushman & Wakefield.
Bangalore recorded the largest drop of nearly 40 per cent in net absorption over last year at 4.5 msf.
According to the report, most cities witnessed a decline in net absorption in the range of 20-40 per cent during the year, except Pune, where incremental new space take-up increased by 15 per cent in 2013. Mumbai registered the highest quantum of net office space absorption at 4.7 msf, followed by Bangalore with office space absorption of around 4.6 msf in 2013.
“Net absorption recorded a decline mostly on account of companies focusing on relocation, expansion and consolidation in order to rationalise costs as well as create greater value for company operations within the country,” the report added.
There was a corresponding decline in the total supply during the same period, which reduced by 14 per cent over the last year at 34 msf.
Vacancies across the office market increased by 0.9 percentage point from 2012, and was 19.4 per cent at the end of 2013.
Developers have also adopted a cautious approach towards supply to achieve acceptable occupancy rates in their projects, believed Cushman and Wakefield.
Sanjay Dutt, Executive Managing Director, South Asia, Cushman and Wakefield, said: “Caution prevailed across corporations due to the slower growth of the Indian economy. At the political arena, this has been a year of realignments and retrospect. Given this, Indian and global corporates have decided to remain invested, but contained their expansion plans.”
“Going forward, with the political dust settling by the mid of next year after general elections, we expect net absorptions to start picking up pace. With pricing remaining largely stable, next year will be an occupiers’ market, offering better quality office space for competitive pricing,” he said.
“Leasing activities will see an increase both on account of entry of new companies into the country, expansion of existing companies and relocation and consolidation activities that are expected to continue,” he added.