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Kolkata’s commercial real estate market showed limited vibrancy in 2021. There was a little action in Grade A office construction and net absorptions. There were no new completions in the first three quarters of 2021. However, the last quarter of 2021 witnessed some completions. Net absorption, which was slow in the first three quarters of 2021, picked up in Q4 of 2021. The commercial property market of Kolkata has suffered from high vacancy rates for some years and 2021 was no different.
Net absorption in Kolkata’s office market jumped nearly three times in 2021 at 0.58 million sq ft (msf) against 0.19 msf in the previous year. However, new completions in Kolkata’s commercial property market fell by about 26% to 0.1 msf in 2021, compared to 0.13 msf seen in 2020, according to a report by JLL India.
Source: JLL India
The work-from-home mode forced vacancy levels to remain high in Kolkata. The vacancy levels in Kolkata fell only marginally to 22.6% during 2021 on an average, compared to an average of 23.5% in 2020. The average rent across all the months of 2021 in Kolkata’s commercial properties remained almost the same in 2021 at Rs 57.9 per sq ft per month, compared to an average of Rs 58.2 per sq ft per month in 2020, according to the report by JLL India.
See also: Net absorption, new completions of office space for rent in Bengaluru increases in 2021
Kolkata’s commercial space micro markets
The commercial property belt of Salt Lake showed maximum vibrancy and accounted for about three-fourths of all net absorptions. This was followed by Rajarhat and the secondary business district (SBD) of Kolkata. The major occupiers in Kolkata in 2021 were from the IT/ITeS and co-working sectors. Even the manufacturing sector saw some good deals in 2021. The IT/ITeS sector is expected to drive the Grade A building office property market of Kolkata in 2022, said the JLL India report.
Scheduled completions in Kolkata’s commercial property market
There are some major commercial buildings being constructed and are scheduled to be completed in 2022 like ‘Arch Square’ in Salt Lake having a gross leasable area of 0.15 msf, ‘Ideal Unique Centre’ in SBD having a gross leasable area of 0.8 msf, ‘Siddha Esplanade’ in CBD having a gross leasable area of 0.2 msf, ‘Intellohub’ in Salt Lake having a gross leasable area of 0.25 msf and ‘Volt’ in CBD having a gross leasable area of 0.085 msf.
There are two buildings that are almost complete – ‘Ideal Unique Center’ in SBD having a gross leasable area of 0.65 msf and ‘Aurora Waterfront’ in Rajarhat having a gross leasable area of 0.1 msf.
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Warehousing and logistics property market in Kolkata
Kolkata saw a total net absorption of 1.9 msf of warehousing and logistics space and 2 msf of new supply in 2021, according to a report by CBRE.
The 3PL sector accounted for 35% of the net absorptions in 2021, followed by the e-commerce sector at 32% and the retail sector at 12% in 2021, according to the report by CBRE. The manufacturing sector also accounted for net absorptions and is expected to absorb sizeable space in 2022.
The major deals in Kolkata’s warehousing and logistics space market were that of Flipkart absorbing 1.81 lakh sq ft on rent in ‘Diamond Logistics Park’ located on NH-2 in the city. Another major deal was also of Flipkart taking up 1.45 lakh sq ft space in the ‘Amta Industrial Park’ located on NH-6 in Kolkata. Another prominent deal was signed by Holisol Logistics of 1.45 lakh sq ft space in ‘Jalan Warehouse’ located on NH-2, said the CBRE report.
The 3PL and manufacturing industries are likely to take up maximum space in 2022 in the city. There are more new warehouse facilities coming up on NH-2 and NH-6 in Kolkata. Some of the new warehouses are being constructed or operated by international companies, which will increase the competition among domestic warehouses in the city. The new warehouses constructed in Kolkata are significantly bigger and more technology driven.