Guess which industries dominated New Delhi’s office leasing activity in Q1

Leasing activity is expected to gain momentum this year.

In 1Q21, strong leasing activity was recorded in the Delhi NCR office market, with substantial contributions from a few big transactions. JLL reveals there were some relocations in order to reduce real estate costs and acquire office space with attractive lease terms. IT/ITeS, BFSI, healthcare, legal and consulting firms dominated the quarterly leasing activity.

Major transactions in Delhi NCR in 1Q21 were Cyril Amarchand Mangaldas at Max Towers in Noida, Syneos Health at DLF Downtown in Gurgaon, Webhelp at DLF Centre Court in Gurgaon, among others. Apart from fresh leasing, a few renewal deals were also recorded in 1Q21.

Here’s more from JLL:

New supply completions in Suburbs add 4 million sq ft

Eight projects spanning 4 million sq ft were completed – four each in the Gurgaon and Noida submarkets. The completions in Noida included Candor TechSpace Tower 5, Alphathum Tower 2 & 3 and KP Tower D. The projects that were completed in Gurgaon include TRIL IT City Tower 1, M3M Urbana Business Park and Capital Tower 2.

The newly completed projects recorded just 15% pre-commitment levels in cumulative area terms. The vacancy rate stood at 29.3% as of 1Q21, increasing by 140 bps q-o-q as it rose in some prime business districts where occupiers either downgraded their spaces or moved to locations with lower rents.

Rents remain stable

Rents remained stable with developers offering incentives like increased rent-free periods on a case-by-case basis. In select micro-markets, some rental declines were recorded on account of rising vacancies and individual landlords being more accomodative.

It is expected that rents will remain largely stable in the short term as the leasing momentum in 2021 will depend upon the containment of the COVID-19 resurgence.

Outlook: Leasing activity expected to rebound in 2021

Leasing activity is expected to gain momentum in 2021; however, it will also depend upon the containment of COVID-19. Occupancy in offices will depend upon control of COVID-19 cases and the rollout of vaccination programmes. Therefore, in the short term, hybrid working models will find increasing prevalence with an increase in demand for hot desking.

Office supply of 8.4 million sq ft is expected to complete in 2021. Occupiers are expected to adopt a flexible leasing strategy involving pre-commitments in upcoming office projects and relocations as well as the extending and blending of existing leases.

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