Not only was the city Delhi-NCR’s best performer in office space leasing in 2020 when markets were ravaged by the pandemic and economic restrictions because of lockdowns, absorption was higher than in Gurugram, according to data compiled by consultancy company Knight Frank.
Office space leased in Noida in 2020 stood at 2.2 million square feet, only a percentage point lower than the previous year. In Gurugram, where leasing activity took a tumble, falling 63% in 2020, office space absorption stood at 2.1 million sq ft.
Mudassir Zaidi, executive director (north), Knight Frank, said supply of new and premium office assets and competitive rents had increased demand for office space in Noida. He also pointed to companies’ requirements of cost-effective real estate as another factor behind companies preferring office space in Noida.
Delhi’s eastern neighbour would thus far constitute on an average 20-25% of the total office take-up in NCR. In 2020, its share went up to around 47% of the total space leased out. Zaidi said Noida and Greater Noida already possess quality infrastructure in remote areas, which will improve with the construction of the international airport in Jewar as well as connectivity with expressways. This is where Gurugram, a premium market for real estate, has a disadvantage – its remote areas are not as well connected or developed in terms of infrastructure.
The emergence of data centers also offers a major opportunity for the Noida region and will fire up office space absorption. Zaidi said multiple data centre operators are scouting for land here due to comparatively better power availability, reasonable land cost and better infrastructure.
In 2020, total office space leased in Delhi-NCR stood at 4.7 million sq ft, 47% lower than in 2019 when the absorption was 8.6 million sq ft. This is mainly because of a 98% fall in leasing activity in the region to just 40,000 sq ft in the second quarter (April-June) due to the lockdown.
Leasing activity picked up from the third quarter and revived to 41% of 2019’s quarterly average. It rose further to 79% in October-December 2020. In October-December 2020, leasing activity increased to 1.7 million sq ft from 90,000 sq ft in the July-September quarter (Q3).
In the second half of 2020, Gurugram saw total office space leasing of 1.15 million sq ft, a 56% decline over the same period in 2019.While office space in the Haryana city continues to be in demand, several companies are relocating within the city to locations offering cheaper rents to sustain operations.
The Knight Frank report pointed out that most IT/ITeS companies that leased space in 2020 did so in Noida and select locations in Gurugram such as Sohna Road, Udyog Vihar and Gwalpahari.
Besides, revisions in real estate space requirements by corporates — with a bulk of the workforce working remotely due to the pandemic — have led to a 4% correction in weighted average rents in 2020.