this story originally appeared in on mar 25 2013bangaloremumbai slow uptake of office space by information technology firms in india is beginning to cast a shadow over the countrys commercial real estate sector data from property consultancy firms indicate figures provided by two property consultants cushman wakefield and dtz show that absorption of office space in 2012 across the top eight indian cities stood at 2905 million sq ft a 23 decline over the previous year of this the share of the it sector which accounted for 64 of the commercial space absorbed in 2009 dropped to 44 in 2012 at 1322 million sq ft it was 1608 million sq ft in 2011 some experts attribute this drop to the economic uncertainty in the west which accounts for over 85 of the revenues of indias it companies a slowdown in these economies has forced several firms to go slow on their expansion plans including taking up of office space with growth in the euro zone and the us likely to be restrained in the short term demand from the it sector is likely to remain subdued in 2013 said rohit kumar head of research at dtz india the lower demand has started to impact supply of office space across the country according to cushman wakefield developers launched 35 million sq ft of new office space in 2012 representing a 10 yearonyear decline for the fourth quarter of 2012 the figure was about 78 million sq ft down almost 30 from the third margins are under pressure companies are moving into the justintime model rather than blocking additional space for future growth and pay extra rental said n venkatraman cfo of bangalorebased sonata software a technology solutions provider companies are using money effectively and not spending huge amount on real estate according to the national association of software and services companies the countrys 100billion it services sector is expected to grow at 11 in the current fiscal compared with 17 in the last besides slower hiring the last few quarters have also seen it firms merging and realigning leased office spaces to curtail expenditure the companies that consolidated office space include mahindra satyam emc sonata software mphasis persistent systems and nokiasiemens in the case of consolidation and relocation exercises occupiers are also able to able to negotiate and get better deals from office space owners and developers as the overall space requirement becomes large said sanjay dutt executive managing director south asia cushman wakefield according to the property consultant real estate and transport of staff together account for about 24 of an it companys total costs and consolidation of offices could translate into a 1522 saving for firms for instance mphasis a unit of hp is looking to move into special economic zones after the software technology parks scheme is phased out of sonata recently closed its facility in bangalores central business district it now occupies 115000 sq ft in the global village tech park the