Signalling a strengthening business confidence, the office space absorption in top eight cities is expected to be an estimated 158 million square feet (msf) during 2015-19.
The net office space absorption in top eight cities is also witnessing a marginal demand of four per cent over previous year, according to a Cushman and Wakefield report.
The average absorption level during 2015-19 is expected stand at 31.6 msf which is higher than the average noted in last five years.
The report said that Bengaluru is likely to see highest share of 27 per cent amounting to 43 msf in cumulative absorption (2015-19) with the IT-ITeS sector driving demand. This will be followed by Delhi-NCR contributing 17 per cent of the total cumulative absorption.
Interestingly, Mumbai is likely to see 17 msf of absorption during the period, lower than Hyderabad and Pune owing to limited infusion of quality supply in the coming years.
The total Grade A office stock is expected to cross the 500 msf mark by 2017, from the current Grade A stock of 404 msf as of September 30, 2015. This is on the back of strong demand from the occupiers that is encouraging the developers to step on the construction of new office space.
The report also said that Bengaluru will be the highest contributor (25 per cent) of the new supply during 2015-19 followed closely by Delhi NCR contributing 21 per cent of the new supply during the same period. Within Bengaluru, Outer Ring Road will have 28 msf of new supply during the same period. In Delhi NCR, Gurgaon is expected to have 7 msf of new supply for the same period. Hyderabad will be contributing 17 per cent of the total new supply during 2015-19.
Sanjay Dutt, MD, Cushman & Wakefield said, “Developers are gearing themselves for the expected demand and are stepping up to complete their under-construction projects. Demand will primarily be led by the IT-ITeS sector in the cities of Bengaluru, Delhi NCR and Hyderabad. Emerging sectors, such as e-commerce, logistics, warehousing, have gained traction over the last two years and going forward, will continue to have a healthy contribution”.