Thursday, 14 January 2016

Office space in city expands by 21%

Office space absorption in the city has grown by more than 21% in 2015, compared to the previous year, says the latest office market survey put out by Colliers International, an international realty consultant.

In comparison, Mumbai saw more than 100% increase in office space absorption during the last one year. Noida 45% and Gurgaon 18% also saw significant rise. Absorption in Delhi meanwhile, plunged by 25%. Bengaluru too, which accounts for about 33% of market share, saw a slight dip in absorption, from 13.77 million sq ft in 2014 to 13.43 million sq ft last year.

Thanks to a few big ticket lease transactions concluded by technology majors and banking, financial services and insurance firms (BFSI) like Accenture, Yes Bank, Ericsson and BNP Paribas, about 5 million sq ft of office space was leased out in Chennai in 2015. In comparison, only 4.11 million sq ft commercial office space was absorbed in 2014.

Shriram Gateway SEZ in Perungalathur, India Bulls in Ambattur and Divyashree IT park and SP Infocity on and off Old Mahabalipuram Road accounted for a major share of this business. About 71% of the total absorption was contributed by IT/ ITeS firms, followed by BFSI 9%, pharma 7%, manufacturing 5%, engineering 4% and others 3%, the report said.

"About 1.5 million sq ft absorption was contributed by the top 5 deals. Vacancy rates fell on account of limited new supply in the market. As demand picks up in 2016, we expect upward pressure on rentals owing to decreasing space availability as there are very few completions happening. Also, very few projects are being started," said Amit Oberoi, head of research and national director at Colliers.

Among the micro markets, OMR with 45% of the market share remained the most preferred location. Central business districts, GST Road and Mount Poonamallee Road together accounted for about 42% of the market share and Ambattur accounted for 12%.

More than 1.8 million sq ft of office space leased out in 2015 was vacant for long. About 3.16 million sq ft of new office space was constructed last year, the report said. Much of the new supply was concentrated on OMR. About 38% of this was contributed by Chennai One SEZ.

Vacancy level in end-December 2015, was 5.8 million sq ft. About 56% of this is on OMR itself, followed by Ambattur 18%. Limited new construction and increase in absorption of space led to decrease in vacancy level from 19.5% in 2014 to 14% in 2015.

Source: PropertyatNeoDevelopers.Wordpress.Com

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