The leasing activity gained momentum in Q3 2017, with 0.82 million sq ft (77,100 sq m) of gross absorption, bringing the total for the first nine months of 2017 to 2.0 million sq ft (0.2 million sq m), a 24% YOY decline (2.74 mn sq ft in YTD September 2016) . Due to shortage of supply, the average deal size came down to 16,000 sq ft (1500 sq m) from 20,500 sq ft (1900 sq m) in Q3 2016. Off-CBD locations such as Yerwada, SB Road, Kalyani Nagar dominated the leasing activity with a 66% share of total absorption. Suburban (Baner, Viman Nagar, Kharadi), peripheral (Hinjewadi) and CBD (Dhole Patil Road, Koregaon Park) locations also maintained their pace in the transaction race with remaining 34% share.

“The supply scenario is likely to improve in next few quarters. Due to sustained demand from technology occupiers in the future, the developers have to expedite supply addition. Increased number of land transactions for commercial development projects should also facilitate additional office stock infusion. In addition to this, rental and capital values may stabilise barring marginal increase in select micromarkets in the next few quarters”, says Rishav Vij, Director, Office Services, Colliers International India.

Technology occupiers remained upbeat in leasing with the maximum share (43%) of absorption. Other industries like banking, insurance and financial services, engineering, manufacturing and healthcare maintained status quo in terms of demand. Coworking operators, logistics and warehousing also made a visible appearance. In our opinion, Pune is set to witness continued firm demand from coworking operators along with logistics and warehousing companies.

As per Colliers Research, no new supply was expected in the Pune market until Q1 2018. However,
facing continuous pressure from occupiers, we are expecting a supply infusion of at least 1.0 million sq ft (0.09 million sq m) by the end of 2017. In addition, 5.85 million sq ft (0.5 million sq m) of new developments are slated for completion over the next three years. This would lead to a 9-10% increase in the city’s current total Grade A stock.