Driven by recovery in the economy, demand for premium office space in the metros has improved during the December 2009 quarter, according to a report by Jones Lang Lasalle Meghraj (JLLM). However, the same for real estate used by retailers, including malls, is recovering at a slower pace, the study has said.
In the Delhi NCR region, for example, 5,352 square metre was leased or purchased in the December 2009 quarter. According to Abhishek Kiran Gupta, head of research, JLLM, this was in stark contrast to the situation earlier this fiscal. ?In those nine months, companies moved out of more expensive locations, such as Nariman Point in Mumbai, and chose cheaper areas in suburbs. Many of them also opted for smaller space,? Gupta said.
In Mumbai, 8,40,000 sqft of office space was either leased or purchased for the year to December. Of that, most of the actions took place in the last six months. Business was brisk in the Bangalore office market as well in the three months to December 2009.
JLLM says companies were willing to lease space at the ruling rentals and there were takers for both top-end and second-grade office space. Approximately, 1.58 million sqft was leased or purchased, more than twice the figure during the September 2009 quarter.
However, in Hyderabad, there were instances where occupiers moved out of prime business areas to relocate to suburbs to save costs. JLLM has noted that space, in many areas, was easily available because occupiers were relocating and many new buildings did not have too many occupants.
The rebound in the retail real estate space, JLLM says, has been slower though footfalls and sales volume are improving. In the Delhi NCR region, for example, space occupied by retailers fell to 445,000 sqft in 2009 compared with 959,000 sqft in 2008.
The Mumbai retail market is still witnessing subdued demand with only a few requests converting into lease transactions. In 2009, retailers used just about a fourth of space they had occupied in the previous year. According to JLLM, about 8,14,000 sqft was leased during the year. Despite an improvement in activities during the H2 of 2009, leasing transactions in malls in Bangalore were lower than previous years. ?The increase in available space was due to the completion of Mantri Mall with some vacant space,?said Gupta.
