Office leasing in Delhi NCR up 6% to 3.63m sq ft in Q3

IT and professional services accounted for 41% of all leasing activity.

According to a report by Cushman and Wakefield, office leasing in Delhi NCR increased 6.13% q-o-q and 46% y-o-y to reach 3.63 million square feet (msf) in Q3. 

IT-BPM and professional services led the quarter’s leasing with a cumulative 41% share in the total gross leasing volume (GLV), followed by engineering & manufacturing with a 13% share, the report added.

Here’s more from Cushman and Wakefield:

Flexible workspace operators (6% of total GLV) continued to lease space in the Gurgaon CBD and Noida sub markets, given strong demand from enterprises for managed office services. Fresh leasing accounted for a majority share of 97% in the quarter’s leasing as occupiers expanded spaces. 

With employees returning to work, rising occupancy levels and strong hiring trends are also driving greater leasing activity. Gurugram accounted for 80% in the quarter’s leasing, led by sub-markets such as Golf Course Extension Road, Cyber City, NH8–Prime, whereas Noida accounted for the rest of GLV. 

Delhi NCR recorded net absorption of 1.3 msf during the quarter, a marginal decline of 1.4% on a q-o-q basis but 67% higher as compared to the same period last year, indicating a healthy rise in occupancy levels in the market.

Robust supply addition seen during the quarter; rise in city wide vacancy levels 

City recorded total supply of about 3.49 msf during this quarter, contributed by sub markets such as Cyber City, Golf Course Extension Road and Noida submarkets, which is the highest supply in recent period history, indicating strengthening demand and rising confidence levels of developers. 

This led to an increase in city wide vacancy level by 95 bps during the quarter; vacancy levels saw a sudden uptick in prominent sub markets due to higher quarterly supply but is expected to decrease in upcoming quarters given healthy demand. 

City level vacancy remains moderately high at 27%. For the upcoming quarters, vacancy is likely to decline due to strong demand conditions, despite the new supply expected to come into the market. City-level market rents remained stable, although select projects with strong leasing traction saw a slight increase in rents. 

Supply pipeline remains strong; peripheral markets to see new supply in coming years

About 19.73 msf of new supply is expected by 2024. About 60% of this supply is expected to come in Gurugram sub markets from locations like Cyber City, Golf Course Road and NH-8 Prime. This quality space addition will lend significant impetus to the region’s commercial real estate activity.