'Nearly 10.4 million sq ft office space absorbed during Apr-June'

Mumbai: Even in the backdrop of global slowdown concerns, nearly 10.4 million sq ft of office space was absorbed in the country during April-June, backed by demand from sectors like IT, BFSI and manufacturing, a report said.

According to the report by Collier International, nearly 10.4 million sq ft of office space was absorbed during second quarter of 2016, registering 18 percent increase from January-March period.

Technology, banking, financial services and insurance (BFSI) and manufacturing firms dominated expansion activities across all cities.

According to the report, Bengaluru remained the top contributor with 30 percent share of the absorption pie, followed by NCR (21 percent), Hyderabad (20 percent), Chennai (15 percent), Mumbai (8 percent), Pune (5 percent) and Kolkata (1 percent).

"The demand was well supplemented by the new supply and existing vacant stock, but vacancy levels have gone down in most of the cities due to limited addition of new supply.

"This quarter about 7 million sq ft was added to the total Grade A office inventory. Also, rentals for Grade A buildings remained stable in majority of micro markets," it said.

Bengaluru, Hyderabad and Pune experienced an upward trajectory with 3-6 percent quarter-on-quarter (q-o-q) average growth in rentals while Gurgaon, Noida, Delhi and Mumbai remained stable in terms of rents.

Across cities, there was high demand for Grade A office spaces in secondary business district (SBD) areas. The micro markets which recorded highest q-o-q rental appreciation across cities were central business districts and outer ring road in Bengaluru, Hadapsar/Fursungi in Pune and SBD in Hyderabad.

Though steady numbers were recorded for Grade A capital values in most cities, an upward trend was also observed in Bengaluru, Noida, and Mumbai across a few micro markets, it said.

"Now that the political uncertainty has dissolved, Hyderabad is an up and coming market to watch out for as several leading companies especially in the IT/ITeS sector are looking at Hyderabad as a preferred destination.

"Bangalore and Mumbai markets are expected to act as frontrunners on the supply side owing to expected completion of several new anticipated projects in coming quarters," the report noted.