The supply of quality office space in Sri Lanka’s commercial capital, Colombo, is not keeping up with the rising demand.
With occupancy levels of globally competitive corporate spaces at an all time high, developers have been given a huge opportunity to capitalise on new and existing space.
The report, titled ‘Colombo: a Modern City in the Making’ by TSK Research, revealed that the only sizable designated office space in the city is just over two million square feet of Grade A space, which is averaging at 98% occupancy.
Several Grade A spaces are operating at 100% occupancy, with the city’s largest per square foot space, the World Trade Centre, operating at a 99% occupancy rate.
“With the receipt of peace dividend in 2009, a huge demand was created for office space in Colombo which, in turn, doubled the rental yield. Although four years have passed since then, still no major office space is added to the capacity,” the report states. It also noted the increased presence of multinational companies seeking and occupying space in the Colombo business district.
“However, out of the many upcoming developments in the city, only a limited space is allocated for offices as more prominence is given to apartments and hotels. A complex of 125,000 sq ft by Access Engineering is the only designated development whereas we believe another 500-700,000 sq ft would be added during the next 3-4 years by other planned mixed development projects (excluding Krrish),” the report elaborated.
“The country is equipped with a large pool of talented IT personnel and infrastructure. However, the unavailability of sizeable space to entertain such large pool of resources is limited in the city and thus only Orion City caters to such demand,” it continues, emphasising the huge opportunity presented to office space developers. Rentals are set to rise with the shortage in supply.