According to the latest report on commercial office space market released by Cushman & Wakefield, a global property consultant, net absorption in the eight cities  (including Mumbai, Delhi-National Capital Region (NCR), Kolkata, Bengaluru, Ahmedabad) in July-September quarter declined by over 50 percent to 5.4 million sqft (msf) over same period last year, but Hyderabad staged a comeback. Hyderabad in Telangana recorded highest levels of office net absorption and Mumbai leads pre-commitment in Q3 2015 (July-September) while Bangalore saw a decline in both net absorption and pre-commitments in the same period.

“Lack of quality ready space in key micro markets at a desirable price has led to many corporations holding out on their leasing plans, despite the overall sentiments for business remaining positive,” the report said. The pre-commitments in the same period for future supply or pre-leases of office spaces saw a sharp rise of 75% and was recorded at 4.7 million sq. ft over the same period last year pushed greatly by pre-commitments in Mumbai. The city saw a significant increase in pre-commitments in the third quarter at about 2.9 million sq. ft.

Total absorption or the total area of office spaces leased out by tenants or developers in these cities during the three-month period stood at 5.4 msf. Hyderabad made an emphatic comeback with net absorption being recorded the highest at levels of 2.4 msf while pre-commitments were at 3,85,000 sqft (sf). Other cities such as Delhi, Mumbai and Bengaluru saw a sharp decline in net absorption of commercial office space. While Mumbai saw a decline of 124%, Bengaluru and Delhi-NCR witnessed a fall of 84% and 42% respectively.

Uncertainty over the bifurcation of Andhra Pradesh had pushed many corporates to a wait-and-watch mode in terms of committing to office space in the city. However, post the division, with the new Telangana government coming up with policies for economic growth and stability, the corporate confidence has seen a growth, the report said. In addition to this, the rental value at which quality office space is available in the city has added to the attractiveness of the location.