New Delhi's net office absorption down 18% to 1.69m sq ft in H1
Blame it on persistent lockdown measures.
Net absorption in New Delhi's Grade A office market declined 43% q-o-q. JLL says looking at the half-year numbers, net absorption of 1.69 million sq ft was recorded in 1H21, a decrease of 18% when compared to 1H20.
According to JLL, the leasing momentum in 2Q21 was led by manufacturing companies, IT/ITeS and consulting firms. Healthcare companies also contributed notably to the demand for office leasing. The overall leasing volume was higher than the net absorption figure as it was characterised by renewals and pre-commitments as well.
Here's more from JLL:
New supply of 1.22 million sq ft added in 2Q21
New supply of 1.22 million sq ft was added in the Noida submarket along the Noida-Greater Noida Expressway. Only 12% of area of the new completions was pre-committed to. In 2H21, 2.96 million sq ft of supply is expected to go operational in Delhi NCR. Out of this, 1.7 million sq ft is expected to be in Gurgaon and 1.26 million sq ft in Noida.
Vacancy increased marginally in Delhi NCR office market as Noida saw three completions with lower pre-commitment levels. The vacancy rate in Noida increased 160 bps q-o-q to 34.3% in 2Q21.
Rents remain stable in the quarter
Rents remained stable; however, developers were accommodating and offering extra rent-free periods on a case-by-case basis. Most developers were open to flexible leases and renewal terms so as to retain tenants.
It is expected that rents will remain largely stable in the short term as the leasing activity in 2H21 will depend upon vaccine rollouts and containment of future outbreaks of the pandemic.
Outlook: Recovery in transaction activity expected in 2H21
Office leasing is expected to rebound in 2H21, however, the recovery is dependent upon the vaccine rollout and whether we see another major outbreak of the pandemic in the city.
In 2H21, 2.96 million sq ft of supply is expected to go operational in Delhi NCR. There will be multiple strategies adopted by the occupiers, involving hub-and-spoke models, pre-committing in upcoming quality supply and extend-and-blend of leases as they focus on cost optimisation while creating effective workplace strategies to bring people back to the office.
Note: Delhi Office refers to Delhi NCR's overall Grade A office market.