Limited Supply Keeps Delhi-NCR Office Market Stable During Pandemic
A cyclist stands in front of a glass building in the DLF Cyber City in Gurgaon, India. (Photographer: Brent Lewin/Bloomberg)

Limited Supply Keeps Delhi-NCR Office Market Stable During Pandemic

Delhi-National Capital Region, one of the top office destinations in India, has seen a vacancy in upscale commercial real estate unchanged from a year earlier despite exits during the pandemic.

Overall vacancy in Grade A office market stood at 23.96% as of September compared with 23.5% a year earlier, according to data shared by Cushman & Wakefield.

“During the initial months of the pandemic, we did see a sudden spike in terminations in the Delhi-NCR office market,” Vibor Jain, head, north India, Cushman & Wakefield, told BloombergQuint. “In the last two months, the termination graph has plateaued. “One thing that worked out for the Delhi-NCR market during these times is the low supply and limited vacancy in core markets. Therefore, even after the initial terminations, the vacancy rates have gone up only marginally.”

A compilation of data from three key micro-markets in Delhi-NCR region—Gurgaon CBD, Gurgaon, Noida and Aerocity (DIAL)—shows marginal increase in the vacancies with demand from Grade-A office space remaining stable.

Office projects analysed account for 43% of Grade-A inventory, with three adding one tower each this year. These reported a 49.4% share in gross leasing activity recorded so far in 2020 in Delhi-NCR, and 97.5% share in fresh leasing.


Vacancies rose in some key prominent projects including Capital Cyberscape Tower 1 in Golf Course Extension Road, DLF Cyber City, Bestech Business Tower, Sohana Road in Gurgaon, and Advant Navis Business Park in Noida Expressway.

To be sure, vacancies in some buildings rose in 2020 on account of capacity addition. For instance, one tower of Embassy Oxygen, Noida became operational in 2020 with 29,000 square feet pre-leased to MetLife and the rest being vacant, according to data from Cushman & Wakefield.

Also read: New Office Space Leasing Picking Up, Says Embassy Office Parks REIT

Key Exits

While there were many tenant exits from the first quarter of 2020 till the third, according to the data, they were fewer than fresh leases, term renewals, and pre-commitments.

Among the companies that gave up space were Oyo Rooms, MetLife, MakeMyTrip, according to the data.

Long-Term Contracts

Most of the fresh leases and renewals are long-term contracts with a minimum tenure of five years or more. Companies including Facebook Inc, Accenture Plc, Guardian Life Insurance Co., HCL Technologies Ltd. took fresh space.

The headline rents haven’t moved in the Delhi-NCR office market but a 5-10% discount is definitely visible in transaction closures, Jain said. With a delay in construction activity resumption, supply for the next year is also likely to see deferrals, he said.

(Updates an earlier version after Cushman & Wakefield withdrew detailed data on key exits citing client confidentiality)

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