Office space absorption to decline
The year 2011 saw record completions and absorption of office space. About 37 million sq. ft. of space was absorbed in 2011, higher than the previous peak of 33 million sq. ft. achieved in 2008. While construction is slated to continue at a high pace, leading to 19% higher completions in 2012 than in 2011, absorption is likely to be subdued. Policy issues and concerns over growth will also keep demand under check.
Trend of large sized leases slows
With the global financial crisis intensifying in 2008, MNCs operating in India, the key drivers of office space demand, started to take their space expansion plans cautiously. As a result, the average lease size declined sharply to 26,980 sq. ft. in 2009 from 89,650 sq. ft. in 2007. Although the industry recovered by 2010 to move up to average lease size of 35,280 sq. ft., it seems that there is still some sluggishness, when it comes to the prime locations in all major cities. Average lease size for H1 FY 2013 is pegged at 25,100 sq. ft.
The year 2011 saw record completions and absorption of office space. About 37 million sq. ft. of space was absorbed in 2011, higher than the previous peak of 33 million sq. ft. achieved in 2008. While construction is slated to continue at a high pace, leading to 19% higher completions in 2012 than in 2011, absorption is likely to be subdued. Policy issues and concerns over growth will also keep demand under check.
Trend of large sized leases slows
With the global financial crisis intensifying in 2008, MNCs operating in India, the key drivers of office space demand, started to take their space expansion plans cautiously. As a result, the average lease size declined sharply to 26,980 sq. ft. in 2009 from 89,650 sq. ft. in 2007. Although the industry recovered by 2010 to move up to average lease size of 35,280 sq. ft., it seems that there is still some sluggishness, when it comes to the prime locations in all major cities. Average lease size for H1 FY 2013 is pegged at 25,100 sq. ft.
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