Demand for prime office space reaches sky high

Mumbai: Demand for prime office space reached a ten quarter high of approximately 11 million sq. ft. for the July - September period, said CBRE's latest Indian Office MarketView Report-Q3 2016.

The quarter recorded a growth of 9% on a q-o-q basis and 14% on a year-on-year basis. As on September 30, 2016, overall prime office space absorption across the seven leading cities was about 28 million sq.ft. for the year, it said.

The demand was led by Bangalore (24%), Hyderabad (17%) and Mumbai (16%), followed by Chennai (16%) and Pune (13%). ``This increase in demand is an indication of an improvement in overall economic sentiment, with both domestic and international corporates remaining upbeat on their entry/expansion strategies,'' it said.

A sector-wise analysis of the quarter's office space take-up revealed that IT/ITeS firms continued to lead office transaction activity, accounting for about 54% of the deal closures. Besides the IT/ITeS sector, BFSI, and Engineering &Manufacturing were the other sectors driving demand for office space. Both these sectors accounted for about 10-11% share each in quarterly space absorption, mostly led by transactions closed in Mumbai and Chennai.

Mumbai and Chennai together accounted for almost 65% of the new supply completed during the quarter, followed by Kolkata (16%).

This was the second quarter in the year in which Mumbai and Kolkata dominated supply additions across key cities. ``In line with the trend observed during the previous few quarters, non-IT developments continued to lead supply, with a share of more than 40% of new space completed, followed by IT buildings that accounted for a share of about 30%,'' said the CBRE report.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.