Companies are renting less office space this quarter, showing a slowdown in economic expansion.
According to the latest report from CBRE, an international real estate consultant, the office space absorbed—a term used for office spaced leased out-- in the first quarter of the calendar year has declined by 37% as against the fourth quarter of calendar year 2011.
“There has been a decline in absorption figures when compared to the same time period last year,” said Anshuman Magazine, chairman & MD, CBRE South Asia Pvt. Ltd. “This is a clear indication of global economic slowdown and a decline in India’s GDP growth. This could also mean that there was a reduction in employment in the services industry.”
While the demand for office space has reduced the supply has continued to grow. This has resulted in a downward pressure on the rents. “Most leading office destinations are expected to witness a strong supply pipeline, which might widen the demand-supply gap, thereby impacting rental growth negatively,” the report stated.
Industry experts say rents in Mumbai and NCR have more or less been stagnant since 2008.