By Accommodation Times News Service
Mumbai’s prime office market witnesses sluggish transaction activity and subdued demand in Q4 2013
• Office space absorption of approximately 1.3 million sq. ft. in Q4 2013
• Office space supply of approximately 900,000 sq. ft. in Q4 2013
Office space absorption in Mumbai during the fourth quarter of 2013 maintained stability on a q-o-q basis—registering around 1.3 million sq. ft., as compared to nearly the same space uptake in the previous quarter—according to the findings of CBRE’s latest report, India Office Market View Q4 2013.
Commenting on the findings of the report, Mr. Anshuman Magazine, Chairman and Managing Director, CBRE South Asia Pvt. Ltd., “The total office space absorption in Mumbai for the entire year stood at over 6 million sq. ft., but while space uptake in Q4 2013 was similar to that in Q3 2013, it was much lesser compared to the first two quarters of the year. Demand for office space remained low during the quarter, as most corporate deferred their expansion plans. The Central Business District (CBD) of Nariman Point, Fort and Cuffe Parade witnessed low demand levels, while Bandra Kurla Complex (BKC), Kurla (W) and Kalina witnessed closure of few small- to mid-sized transactions. It was the city’s peripheral markets, however, that continued to remain the most preferred location of corporate occupiers. Thane and Navi Mumbai continued to see strong demand from clients looking for cost-effective office space options.”
Mumbai’s office space addition in Q4 2013 stood at around 900,000 sq. ft., taking the city’s total supply for the year ended December 2013 up to nearly 8.4 million sq. ft. The CBD, Lower Parel, and the BKC, Kurla (W) and Kalina micro-markets did not see any new supply additions. The city’s peripheral markets, however, saw around 0.74 million sq. ft. of IT space addition during the fourth quarter.
Going forward, demand is likely to be concentrated mostly in peripheral markets, owing to abundant availability of cost-effective, Grade A office space options. Financial institutions and pharmaceutical firms are likely to drive office space demand in the near term. Owing to large anticipated supply addition, rental and capital values are likely to remain under pressure across most micro-markets of Mumbai in the short to medium term.