Net absorption in 2014 increases by 28 per cent YOY over 32 msf

Bengaluru tops the charts with highest net absorption of 8.9 msf

Ahmedabad registers a 163% increase in net absorption in 2014;

Kolkata records highest overall vacancy of 28% followed by Delhi-NCR at 26.8%.

Mumbai 25th January, 2014: The top eight cities[1] of India recorded overall net office space absorption[2] of 32.5 msf in 2014 recorded Cushman & Wakefield, global real estate consultants. The overall net absorption increased 28% year-on-year (y-o-y).

Ahmedabad witnessed the highest increase of 163% in net absorption albeit on a low base. Kolkata saw a decline of 33% in overall net absorption from the previous year while Mumbai and Pune recorded a marginal 6% and 4% decline respectively. Bengaluru outpacing other cities by registering 8.9 msf net absorption during the year, a growth of 87% y-o-y. Delhi-NCR recorded 6.2 msf net absorption followed by Mumbai (4.5 msf) and Hyderabad (4.4 msf). Majority of the absorption in Hyderabad during this year was driven by pre-commitments from previous years.

Supply increased by 9% y-o-y, to a total of 36.6 msf supply in 2014.92% (33.6 msf) was contributed by Grade A developments. Bengaluru recorded the highest supply addition of 9.4 msf, registering a 67% increase in yearly supply. It was followed by Delhi-NCR (8.7 mf) and Mumbai (5.9 msf).

Sanjay Dutt, Executive Managing Director, South Asia, Cushman & Wakefield said, “With  the election of a stable single party government coming into power by the mid of 2014, overall business sentiments have improved with the office market seeing significant levels activities in the second half of 2014. Many companies began executing their growth strategies with greater confidence leading to improvement in demand for office spaces. We believe that demand for office will remain robust in the next two years as many companies continue to relocate and adopt workplace transformation strategies, pick-up in hiring and growth in demand for new developments will lead to an overall improvement in absorption volumes. Rentals will continue to remain largely stable due to likely high supply addition expected in 2015, which will in-turn help many markets remain occupier favourable in the short term.”

All Grades Statistics

Sanjay further continued, “2014 saw a significant increase in the number of large deals with office spaces over 200,000 sf contributing to approximately 50% of the total Grade A office leasing. We expect to see more such of larger space deals in the New Year with many global and national companies looking at expansion and relocation spaces. We are also expecting to see similar or even larger deal. We estimate the office Grade A net absorption to be approximately 37 msf by end of 2015.”  

[1] Ahmedabad, Bengaluru, Chennai, Delhi-NCR, Hyderabad, Kolkata, Mumbai and Pune

[2] Net absorption refers to the new / additional occupation activity and includes only the incremental new space take-up in instances of relocations and expansion from within the city; does not include lease renewals and relocations to same sized office spaces.