KOLKATA: Despite starting the year on a subdued note, the peripheral business district of Kolkata’s Salt Lake and Rajarhat micro-markets picked-up supply activity and occupier interest from the second quarter of the year—sustaining interests till the third quarter of 2013. The peripheral market accounts for nearly 90% of the total investment grade office space addition of about 0.90 million sq.ft in the city by September 2013.
While the second quarter saw about 0.70 million sq.ft of office space getting operational in the region, the recent quarter ended September saw an additional space infusion of about 85,000 sq.ft. There are expectations of more supply addition in the pipeline for the coming quarters—approximately 0.83 million sq.ft of fresh Grade A office space is anticipated in the peripheral business district in the next six months.
Absorption levels in the micro-market, however, have remained conservative in comparison to the supply rate—accounting for about a little more than 40% of the total absorption of new office space in the city so far. As a result of subdued demand and average vacancy rates of 19-20%, the area’s rental values have remained stable over the last three quarters of 2013.
Rental values have remained largely stable across all micro markets, a trend that is likely to continue over the next few months. Demand for office space is unlikely to pick up pace in the short term. Going forward, enquiries-albeit limited in nature-currently under discussion are likely to convert into transaction closures in the coming months, mainly driven by expansion or relocation requirements of existing corporate occupiers.