‘Office space absorption to see 68% growth this year’
Mumbai: The absorption of office space in suburban locations is expected to increase to 68 percent this year compared to 60 percent in 2012, a recent survey by property consultant Jone Lang LaSalle has said.
With the existing commercial business districts saturating, companies planning to expand their operations in the next five years may prefer to shift to suburban locations, the survey added.
"Suburban locations are home to the majority of office real estate occupiers and will have a growing role in determining the performance of the country's office market," it said.
By shifting to this location, they will be able to reduce their real estate costs and move into superior quality projects, which are available at lower rents and offer modern amenities, car parking and safety, according to the survey said.
Last year, the absorption of office space in the country totalled to 26.7 million sq ft, out of which, suburban locations accounted for more than 60 percent or 16.6 million sq ft.
"This absorption in the suburban locations is expected to increase further to 68 percent or 19.2 million sq ft in 2013. These growing real estate activities in suburban locations of India provide evidence of a shift in gravity towards this market," the survey said.
The banking, financial services and insurance (BFSI) sector currently dominates the CBD market due to its willingness to pay higher rents, whereas IT/ITeS occupiers dominate the suburban market in terms of occupancy due to the availability of larger office space areas and also because the nature of their business makes them vulnerable to higher real estate overhead costs, the JLL survey observed.