Pune has 31 mn sq ft of REITable office space, warehousing space at 27 mn sq ft with growth of 19% annually
New Delhi: Pune has 31 million square feet of REITable office space that includes all operational lease-only assets with a area of more than or equal to 2 lakh square feet.
The office space market in Pune accounts for a handsome share of two listed REITs that highlights potential for REITable office assets in the Maharashtrian city, according to a report by JLL.
Most of REITable office stock is owned and operated by major real estate developers. Localities like Hinjewadi, Kharadi, Balewadi and Baner will account for 49 percent of the total REITable office stock in Pune.
The industrial and warehousing scenario has grown rapidly in the city with the overall stock of such properties growing 19 percent annually in the last 5 years to touch 27 million square feet mark in 2020.
Out of this 27 million square feet, about 65 percent is Grade A stock. The market has seen decent demand supply dynamics for the last few years, which has taken the vacancy levels to just around 10 percent.
This decent demand-supply scenario is likely to continue over the coming few years. This will make Pune city one of the most lucrative markets in the country for the development of industrial parks and even warehouses. The city has been witnessing handsome growth in warehousing since 2018, especially around Nagar Road and Chakan-Talegaon submarkets.
Pune’s warehousing activities witnessed a decline because of the pandemic. However, the activities started getting back to original momentum in first quarter of 2021 with commencement of construction of the delayed projects. Some of the projects were even completed in this period. This resulted in an increase in supply by as much as 30 percent as against the previous quarter and 0.72 million square feet of absorption in first quarter of 2021.
It is likely that the absorption will come back to pre pandemic levels of 2018 by 2021. The post-pandemic recovery will be supported by the sustained growth in demand from various sectors like 3PL/ logistics, e-commerce, FMCG, etc. The absorption level of such properties is expected to gain higher momentum in 2022, nearing 4 million square feet.