New Delhi: Net absorption of office space fell by 11 percent in Delhi-NCR to over 7 lakh sq ft during January-March with corporates focusing on consolidation and relocation, according to a report by Cushman & Wakefield.
The net leasing of office space stood at nearly 7.96 lakh sq ft in the year-ago period.
The fall was steeper at 37 percent compared with the previous quarter.
In its report 'Office Snapshot of Delhi-NCR' for first quarter of 2016, the property consultant said that Grade A office supply in Delhi-NCR was recorded at 2.5 million sq ft, an increase of over 82 per cent from the previous quarter.
"At 7,09,200 sq ft, Grade A net absorption declined by 37 percent compared with the previous quarter due to consolidations and relocations by occupiers," C&W said.
"The surge in new supply along with the dip in net absorption during the quarter led to a rise in overall vacancy levels in Grade A developments," it added.
Overall vacancy was recorded at 30.1 percent, a 1.1 percentage increase from the previous quarter. Rental values of most sub-markets remained largely stable during the quarter.
On outlook, the consultant said that about 2 million sq ft of office space, concentrated in Gurgaon and Noida, is scheduled for completion during the next quarter.
"Demand is expected to remain at similar levels during the next quarter. Rental values are expected to maintain status quo across sub-markets amidst stable demand," the report said.
Overall in the eight major cities of the country, C&W said the net absorption of office space declined by 13 per cent to 7.06 million sq ft in January-March 2016 compared with the corresponding period of previous year.
Although net absorption fell during January-March, the overall office demand increased by 19 percent to 11.7 million sq ft across eight cities on the back of high pre-commitments.
As per the report, Delhi-NCR, Mumbai, Kolkata, Chennai and Pune saw drop in net absorption of office space.
However, Bengaluru, Ahmedabad and Hyderabad witnessed increase in net leasing.
Net absorption of office space rose maximum by 27 percent in Ahmedabad to 0.19 million sq ft during the January-March quarter of 2016 compared with the year-ago period.
In Hyderabad, net leasing rose by 9 percent 1.2 million sq ft, while in Bengaluru it went up by 1 percent to 3.27 million sq ft during the period under review.
But the net absorption was down by 37 percent each in Chennai and Kolkata at 0.44 million sq ft and 0.14 million sq ft, respectively.
Mumbai saw a drop of 49 percent in net absorption of office space at 0.54 million sq ft, while in Pune it fell 32 percent to 0.57 million sq ft.