Delhi office leasing volume rises 24% to 3.6msf in Q2

This brings total leasing volume in H1 to 6.5msf.

According to a report from Cushman and Wakefield, Delhi NCR witnessed a gross leasing volume of 3.6 msf in Q2-2023, marking a notable increase of 24% compared to previous quarter and 6% compared to the same period last year. 

This quarter's leasing activity also saw a 15% rise compared to the quarterly average of the past 8 quarters, indicating healthy demand for office space in NCR. In H1-23, the total leasing volume reached 6.48 msf, nearly equal to the volume seen in H1 2022.

Here’s more from Cushman and Wakefield:

Fresh leases accounted for the majority of the demand in Q2, holding a share of 78%, followed by pre-commitments and term renewals with 15% and 6%shares respectively. Professional services sector led the leasing activity in this quarter with a 20% share in GLV, followed by BFSI and flexible workspaces with 18% and 17% shares, respectively. In contrast, the dominant IT-BPM sector witnessed a decline, representing only a 6% share in leases during the quarter. 

Gurugram accounted for the majority of leasing activity, with a 54% share, driven by submarkets such as DLF Cyber City, NH8 - Prime, and Golf CourseRoad Extension. Noida, on the other hand, contributed 39% to the leasing activity, with Noida Expressway being a prominent submarket. In terms of net absorption, Delhi NCR recorded 1.33 msf of net space take-up in the quarter, representing an 8% increase compared to Q1-23 but a 10% drop on a yoy basis. The total net absorption for H1 23 in NCR amounted to 2.57 msf, reflecting an 8% decline compared to H1 22.

Vacancy drops as demand strengthens and supply dries up during Q2 Vacancy levels in Delhi NCR stood at 24.6% as of Q2, a decline of 68 basis points on a qoq basis and approximately 1.4% lower compared to the same period last year. This decline can be attributed to the absence of new completions during the quarter as well as strong leasing activity. Micro markets likeNoida Expressway, Noida City 2, Aerocity in Delhi, DLF Cyber City, and Golf Course Road Extension in Gurugram witnessed the largest decrease in vacancy rates, ranging from 1.5% to 5%. The upcoming influx of 4.6 msf of new supply in H2 2023 may slightly increase vacancy levels in the coming quarters. 

Rentals witness a marginal increase 

City-level rentals observed a slight increase, with 1.3% growth on a qoq basis and a 1.8% increase compared to the same period last year. This growth can be attributed to the healthy leasing activity during the quarter. Select micro markets such as Golf Course Road Extension, NH8 – Prime in Gurugram andNoida expressway may witness further increase in rentals as some quality projects are slated for completion in the coming quarters.