Delhi gross office leasing volume declines 16% to 3.01m sq ft in Q2

Fresh space takeup accounted for 77% of the transactions.

According to a Cushman and Wakefield report, Delhi NCR’s office market witnessed a gross leasing volume (GLV) of 3.01 msf in the second quarter of 2024, similar to the volumes recorded in the prior quarter, although a 16% dip from activity witnessed in the same period last year. 

“Bulk of the deals recorded consisted of fresh space take-up as it accounted for 77% share, and precommitments continued to remain high at 23% as seen in the previous year,” the report added.

Here’s more from Cushman and Wakefield:

IT-BPM led the quarterly demand with 31% share, followed by Professional Services with 20% share. The first half of the year witnessed close to 5.93 msf of total GLV, 8% dip in activity seen in the same period last year.

In terms of net absorption, NCR recorded 1.45 msf during Q2-24 similar to the activity witnessed in previous quarter and 9.5% increase from Q2-23. The city recorded 2.91 msf of net absorption in H1-24, similar to activity witnessed in the same period last year. 

At a sub-market level, Gurugram continued to lead demand within NCR, securing a 61% share in demand mostly in prime sub-markets such as Golf Course Road, Golf Course Extension Road and Sohna Road, cumulatively representing 40% of overall GLV of the city. Noida contributed to the remaining demand, with a 23% share primarily in Sector 62, followed by the Noida Expressway.

Vacancy dips with steady leasing and limited quarterly supply 

Delhi NCR witnessed close to 0.31 msf of supply addition during the quarter, slower than last quarter which had record quarterly supply numbers. Given the limited supply coupled with steady fresh leasing activity, the city level vacancy witnessed an 80-bps dip bringing it down to 24%. 

Close to 1.73 msf of supply is expected in next six months, largely concentrated in Noida Expressway, which is expected to benefit from accessibility to new Noida International Airport (Phase I operations expected in H1 2025). Close to 17.14 msf of supply is expected to enter the market during Q3-2024 to 2026. 

Rentals continue to rise 

Delhi NCR saw rents increase by almost 2% q-o-q and a notable annual rental growth of 4% on average. Growth in rentals may be attributed to healthy leasing activity during the quarter. The rental rates are expected to remain range-bound in the coming quarters of 2024, as the city anticipates a heavy influx of supply alongside already elevated vacancy rates in certain submarkets.