According to a recent report by property consultancy Colliers International, Gurgaon has maintained its position as the most sought after place for opening offices in the National Capital Region (NCR) among companies, accounting for 51% share or 3.88 mln sqft of the total office space leased in the region in 2016.
Noida and Delhi accounted for about 36% and 13% share, respectively, out of the total 7.6 mln sqft office space absorbed in the NCR in 2016, at par with 2015 numbers. While the technology sector remained the key driver of office leasing activity in Gurgaon with a 32% share, the share reduced from the last year’s number of 64%. In Noida also the technology sector remained the key demand driver with 60% share.
A total of 41.6 mln sqft of office space was leased last year across the top cities in India, with Bengaluru maintaining its leading position with a 31% share or 12.8 mln sqft of office space leased.
Delhi-NCR took the second spot with 18% share of the total occupier demand, followed by Mumbai with 14%, Hyderabad and Chennai with 13% each, and Pune and Kolkata with 9% and 2%, respectively, showed the report.
“In the technology driven markets such as Hyderabad, Bangalore, Pune the demand-supply gap is likely to remain a concern in short term. Tenant appetite for higher quality offices has been reflected in new leases being executed at above market rates in select grade A buildings in all the cities,” said Surabhi Arora, Senior Associate Director, Research at Colliers International.
Just 27.2 mln sqft of Grade A office space was released into the market in 2016. “This was insufficient to cope with the very strong demand especially in markets such as Bengaluru, Hyderabad, and Pune and resulted in a significant fall in vacancy levels and an increase in office rents in most of the micromarkets in these cities,” she said.
Colliers expects a similar trend in 2017 as well, with an upward pressure on rents at least in the first half of the year in most of the preferred markets for grade A buildings.
However, due to a dearth of quality office space in other technology-driven markets like Pune and Bengaluru, NCR may see increased absorption volumes in the coming quarters due to supply-led demand, feels Arora.