Delhi gross office leasing volume hits nearly 3m sq ft in Q3

Net absorption rose to 1.7 million sq ft during the quarter.

Delhi witnessed robust office leasing activity in 3Q23. Gross leasing during the quarter was high at 2.98 million sq ft. 

According to JLL, the leasing momentum was driven by the manufacturing, co-working and IT/ITeS industries. Gurgaon led with a 67% share of quarterly net absorption, followed by Noida, which had 25%.

Here’s more from JLL:

Net absorption reached 1.69 million sq ft during the quarter, increasing by 25% q-o-q with YTD net absorption (Jan–Sept 2023) at 5.01 million sq ft, reaching 81% of 2022’s annual number. Net absorption in 2023 is expected to be similar to 2022, as new space acquisitions are expected to remain healthy.

Quarterly supply at 1.52 million sq ft

Five office buildings totalling around 1.52 million sq ft were completed during the quarter. In the quarterly supply infusion, the pre-commitment rate was just 7%. In 4Q23, projects totalling around 1.40 million sq ft are expected to be completed, thereby taking the total supply to 5.8 million sq ft in full-year 2023.

Vacancy declined to 26.6% in 3Q23, down by 40 bps q-o-q. Prime markets and superior-grade projects continue to be preferred by occupiers, thereby keeping their vacancy at lower levels.

Rents remain stable; increasing in a few quality projects in Noida

Rents showed a strengthening trend in quality projects in Noida. In other submarkets, rents largely remained stable. Developers quoted higher rents for new phases of existing projects.

Demand is strengthening in core office markets by a wide variety of occupiers, including flex space operators. It is expected that rents will increase in Prime office corridors and quality office buildings backed by institutional investors.

Outlook: Sustained leasing momentum to continue

Stable space requirements for both expansion and relocation/consolidation are expected to close the year on a positive note. The office market is clearly insulated from global headwinds, and the leasing momentum is expected to be sustained across all occupier categories.

Strong space take-up is anticipated in 4Q23 as well, resulting in a projected net absorption of around 6.1 million sq ft for the full year. Strong market fundamentals and a high-quality supply pipeline are expected to act as catalysts to draw investor attention to office assets in the Delhi NCR.

Note: Delhi Office refers to Delhi NCR's overall Grade A office market.