Office space absorption drops 23% in 8 cities: Cushman and Wakefield

NEW DELHI: Office space absorption dipped by 23% during 2012 in major cities to 29 m sq ft as corporates remained cautious of expanding businesses amid global uncertainties and slowdown in the Indian economy, property consultant Cushman and Wakefield has said.

The total net absorption for 2012 was recorded at 29.05 m sq ft in 8 major cities - NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Pune, Kolkata and Ahmedabad - against 37.73 m sq ft in the previous year, the report said. The supply of office space also dropped by 10% at 35.30 m sq ft as against 39.35 m sq ft in 2011. "The cautious approach by global and Indian companies, in view of a slower economic growth led to a decline in absorption levels," the consultant said, adding that majority of the companies put on hold their expansion plans.

Chennai saw the highest decline - down 51% over last year. Bengaluru, a traditionally high absorption market recorded a decline of 24% over last year. "Almost all locations which are driven by the IT/ ITeS and related industries recorded a slowdown in absorption," C&W said.

Bengaluru noted the highest net absorption of 7.29 m sq ft, followed by Mumbai that saw 6.26 m sq ft of net absorption for the year. Leasing activity (net absorption) declined in all cities except Ahmedabad and Mumbai that saw a notable increase of 38% and 9%, respectively, over the last year. NCR witnessed absorption of about 4.76 million sq ft, a drop of about 12% from 2011.