Poor demand from corporates and business establishments saw Ahmedabad register a 37% drop in office-space being leased out during the year 2013. This drop is one of the highest in the country, after Bangalore.
Compared to 9.04 lakh square feet of space that was occupied by business establishements in 2012, the absorption this year was down by 37% to 5.65 lakh square feet, states the latest report by global consultants, Cushman & Wakefield (C&W).
This dip in off-take of office space in Ahmedabad was "mainly due to limited expansions by companies during the year," states the report about the city which saw a supply of 18.61 lakh square feet of office space during 2013.
This dip in Ahmedabad is the second biggest dip after Bangalore which saw absorption of office space dip by 39%. The cities of Chennai (-25%), Hyderabad (-29%), Kolkata (-26%), Mumabi (-25%) and NCR (-20%) all saw a decline in absorbing office spaces during 2013. Only Pune saw a growth of 15% during the year.
“Caution prevailed across corporations due to the slower growth of the Indian economy. Also at the political arena, this has been a year of realignments and retrospect. Given which Indian and global corporate had decided to remain invested but contained their expansion plans. Going forward, with the political dust settling by the mid of next year post general elections, we expect net absorption to start picking up pace," said Sanjay Dutt, executive managing director, South Asia of C&W.
In Ahmedabad, the average transaction size of offices in the city was in the range of 5,000-7,000 square feet. Most of the leasing activity during 2013 was concentrated at Prahladnagar (53%) asnd SG Highway (44%) which has seen a number of new office complexes being built in the last couple of years.
The vacancy levels in office complexes in Ahmedabad an indicator of unoccupied offices also increased by 11.7% in 2012 to 17.7% in 2013.
This poor demand for office spaces seems to have discouraged developers in constructing more office complexes. The supply of office space in Ahmedabad declined by about 6% during 2013.