As corporates implement their growth plans, the vacancy level in office space across the country is expected to decline to 13 per cent in 2016-17, research from real estate consultancy JLL India showed.

“Corporate occupiers have been in expansion mode. Companies, especially in the e-commerce, telecom and healthcare sectors, have been snapping up office space across major cities,” Ramesh Nair, COO – Business & International Director, JLL India, said in a statement.

Comparison across cities shows that office space vacancy in Bengaluru has reduced from 16 per cent in 2011 to 4 per cent at present, in Chennai it has come down from 32 per cent in 2010 to 12.5 per cent. Hyderabad has seen vacancy reduce from 17 per cent in 2009 to less than 10 per cent. “The sharpest fall in pan-India vacancy is expected between 2016 and 2017 when it will be slightly less than 13 per cent,” according to the research. In 2015, India’s office space absorption was around 36 million sq ft, the second highest after 2011. But unlike 2011 when absorption was largely limited to newly-completed buildings, in 2015 it was distributed across new and old buildings.

“While the demand in 2011 was due to lower rentals after the global financial crisis; in 2015, it was largely due to implementation of growth plans by corporates. Interestingly, in 2014, demand had surpassed supply for the first time since 2007. The demand forecast looks strong in the medium-term,” the research said.

With this, developers, who had been shying away from commercial projects after burning their fingers during 2009-2012 owing to a lack of understanding of the commercial asset class and lack of funding, are returning to the market.

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