By Accommodation Times News Service
Registers significant-o-growth in office space supply
Close to 7.3 million sq. ft of office space supply entered the market in Q4 2013, as compared to less than 3 million sq. ft. in Q3 2013. This was led largely by a number of commercial and SEZ developments that had been delayed over the previous two quarters, and were finally completed in Q4 2013. Pune led these project completions, followed by Bangalore and Hyderabad—together contributing to about 71% of the total new supply in India’s top office markets in the last quarter of 2013.
The fourth quarter of 2013 accounted for around 7.3 million sq. ft. of new office space addition across India’s major cities, with this supply distribution lead by Pune (30%), Bangalore (26%), and Hyderabad (15%). During the fourth quarter, prime office space supply in Pune grew significantly q-o-q—registering above 2.0 million sq. ft. of fresh space, as compared to less than 50,000 sq. ft. of supply addition in Q3 2013.
The city’s total commercial office space supply addition for 2013 stood at approximately 4.4 million sq. ft. registering the third largest supply addition in 2013, following Mumbai (8.4 million sq. ft.) and Bangalore (8 million sq. ft.). High vacancies and lower demand levels had resulted in quite a few project delays over the previous quarters of 2013—leading to a significant supply addition by the year-end in the city. Pune’s Off Central Business District (Off CBD) micro-markets of Viman Nagar, Magarpatta, Aundh, Baner, Shanker Seth Road, SB Road and Nagar Road saw the maximum supply addition to the tune of 62% in the review quarter, over the Peripheral Business District (PBD; 30%), and the Central Business District (CBD; 8%). Around 1 million sq. ft. of IT SEZ space was added to the city’s existing stock, with the completion of the EON SEZ – An at Kharadi in the PBD; while the CBD did not witness any significant project completions in Q4 2013.
Pune’s total office space absorption in 2013 stood at around 2 million sq. ft., with the fourth quarter contributing to about520, 000 sq. ft. of space take-up—a q-o-q growth of around 23% over absorption in Q3 2013.With supply numbers over-riding absorption levels, rental values remained under pressure and continued to maintain stability across most micro-markets during the review period. While Off CBD rental values in the IT/IT SEZ segment remained stable, the commercial segment saw a negligible appreciation of about 1–2% in rental values, owing to persistent demand from corporate preferring to set up their offices in the region.
Pune witnessed an increase in leasing activity during the quarter; and this trend is likely to continue into the coming few months too. A large number of transactions, which are in advanced stages of discussion, are likely to be closed within the next quarter. The IT/ITeS, banking and financial services segments will continue to drive the demand for office space in the Off CBD and PBD locations of Pune. Owing to a steady addition of supply and persistent demand levels, rental values are likely to remain stable across most of the city’s micro-markets in the short to medium term.