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Business News/ Market / Mark-to-market/  Low supply constrained office space absorption in 2017

Low supply constrained office space absorption in 2017

The buoyant demand for office space is likely to bring in more investments in the arena, with more developers jumping into the race

Chennai recorded the highest growth in leasing activities. Bengaluru, which is the largest office market, posted the biggest decline of 30% year-on-year on account of low supply.

According to the last 2017 report by Cushman and Wakefield, the net absorption of office space in the top eight cities during 2017 was 7% lower than the year ago, at 30.6 million square feet. In contrast to the situation in the residential segment, which is beset with oversupply, the office segment saw supply unable to cope with demand.

About 50 leasing transactions, which were more than 100,000 sq. ft each, reflected healthy growth in corporate activity in 2017.

Chennai recorded the highest growth in leasing activities. Bengaluru, which is the largest office market, posted the biggest decline of 30% year-on-year on account of low supply.

One of the reasons for lower absorption and supply is the hangover of global developments like Brexit and Donald Trump being elected President of the US, which had been expected to have an impact on information technology, outsourcing and related jobs in India. This affected sentiment in office leasing. But the tide has turned in the second half.

Meanwhile, a lack of quality buildings also constrained growth in leasing. Buoyant demand is likely to attract more investments in the office space, with more developers jumping in.

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