Second quarter of 2011 witnesses over 33% increase in office space

NEW DELHI: The commercial office space market in the country has seen strong demand over the last few quarters. In the April-June quarter of 2011, about 8 million sq ft of office space was absorbed across the country, according to CB Richard Ellis India.

he previous quarter of the year saw an absorption of 6 million sq ft. NCR, Mumbai, Bangalore and Chennai were the leading cities, accounting for almost 80% of the entire space that was absorbed in the country.

"The steady pace of space take up is primarily fueled by sustained economic development and increase in outsourcing business, resulting in robust corporate expansion plans," says Anshuman Magazine, chairman and managing director of CB Richards Ellis South Asia. While demand remains strong for commercial office space, most micro markets are staring at an oversupply situation with additional space being added in the future especially in IT/SEZ space. " Rental values in certain micro markets are expected to remain flat," he added.

The second quarter of 2011 witnessed the addition of almost 10 million sq ft of new supply in all leading cities of the country. This was largely dominated by Mumbai, Pune and Kolkata, comprising almost 80% of the total stock that came on stream in April-June 2011 quarter. While demand levels have remained buoyant in the last few months, the large supply pipeline, might alter the demand curve in the coming few quarters.