The commercial office space market in the city which regained momentum towards the end of last year could be witnessing a considerable infusion of fresh supplies in the first half of the present year.
A Cushman & Wakefield report on the last quarter of 2011 in its outlook expected the demand for SEZ space to remain healthy in the short term. Underlining the shortage of Grade-A office space in the city, it said the shortage was likely to continue specially in the suburban micro-market during the first half of 2012. The market outlook also looks at the possibility of around 1 million square feet of fresh supplies infused across the city in two quarters. Several of the upcoming SEZ projects in the year 2012 were already pre-committed and the IT/ITES remained as the largest demand driver in the market with nearly 56 per cent share in absorption.
At the same time, the growing demand and restricted supply in the short term were likely to reduce the vacancy levels and exerting an upward pressure on rentals in the suburban micro-market.
The report observed that the rentals across all other micro-markets are likely to stabilize owing to a moderate demand and competitive pressure from second generation properties. Last year, the overall absorption in terms of commercial office space market was around 3.76 million square feet with the suburban micro-market dominating it with nearly 75 per cent. The year also saw the trend in non-IT/ITES absorption remaining buoyant. The report also noted that market was witness to a sizeable growth in transactions in the engineering, professional and technical services sector which accounted for nearly 30 per cent of the total space taken up during the fourth quarter of last year.
That quarter also had several projects across the Central Business Districts (CBD), Off-CBD and the prime suburban micro-markets getting delayed due to a modest demand and rising construction costs.
