Companies started moving to Noida after the first lockdown in March 2020, as rents were less than half of Gurgaon and as a result, Noida’s share of overall leasing was higher than Gurgaon for the first time in April-June 2020. But this changed again due to lack of new office space in Noida to meet the demand.
The Cushman & Wakefield quarterly report said NCR recorded strong leasing at 3.63 million square feet in the second quarter, up 6.13% and 46% from a year ago.
IT-BPM and professional services led the quarter’s leasing with a 41% share of the total gross leasing volume, followed by engineering and manufacturing with a 13% share.
“Gurgaon continues to enjoy a high percentage of leasing share, but Noida’s leasing share is growing at a faster pace due to growing infrastructure and relatively cheap rents,” said Bivore Jain, Managing Director North India, Cushman & Wakefield. “Delhi-NCR has a good mix of clients ranging from IT, professional services, consulting, engineering, manufacturing, etc., which always keeps this market away from any major swings in a sector.”
The demand for office space in Noida is increasing mainly due to relatively high rents in established office space locations in Gurgaon such as DLF Cyber City, Golf Course Road, MG Road and Shilpa Bihar. But many still prefer to stay in Gurgaon as no big developer has any space left in Noida.
However, builders in Noida say that a key benefit of working for them is the significant improvement in infrastructure.
According to Cushman & Wakefield, flexible workspace operators continue to lease space in the Gurgaon CBD and Noida submarkets, driven by strong demand from enterprises for managed office services.
New leasing accounted for 97% of the quarter’s leasing as occupiers expanded space.
With employees returning to work, rising occupancy levels and strong hiring trends are also driving greater leasing activity.
According to Cushman & Wakefield, Delhi-NCR added 3.49 million sq ft of office space in the April-June quarter, which was the highest supply in the market in recent history, indicating strengthening demand and rising developer confidence levels.
“This resulted in a 95 basis point increase in citywide vacancy levels during the quarter; vacancy levels in prominent submarkets spiked due to higher quarterly supply but are expected to moderate in the coming quarters due to healthy demand. City-level vacancy remains moderately high at 27%,” Cushman and Wakefield said.
Although more office space is expected to come on the market, vacancy rates may decline over the next few quarters as demand remains high.
Peripheral areas of NCR with around 19.73 million square feet by 2024 will see new supply in the coming years. About 60% of this supply is expected to come to the Gurugram submarket in locations such as Cyber City, Golf Course Road and NH-8. Chief.