Over the last decade, due to limited supply in micromarkets in Delhi and availability of ample Grade A office supply in Gurgaon’s micromarkets, the focus of several multinationals/ office occupiers has shifted to Gurgaon, especially the occupiers in the IT and ITeS sector. In fact, at least 11 million sq ft of office supply is expected by 2020 in Gurgaon; most of which would be along the Golf Course Extension Road and parts of NH-8 micromarkets. A considerable proportion of this supply would be in the form of IT/ITeS SEZ developments, according to Colliers Research.
The Ascendas-Singbridge SEZ with 0.5 million sq ft of supply under phase 1 is likely to see completion by the end of 2017. The 60-acre SEZ development near sector 59, once fully completed, will add another 8 million sq ft of international standard business space. This upcoming SEZ supply is likely to attract large technology sector occupiers.
Further, being closer to Delhi, certain pockets of NH 8 (which are in the beginning of Gurgaon while commuting from Delhi) will also attract interest from tenants/occupiers looking for quality real estate in terms of large contiguous floor plates, scalability options, better planned amenities, provision for car parking, safety and security features, etc. For instance, “projects like ‘DLF Cyber Park’, an upcoming 2.5 million sq ft IT/ITeS development on NH 8 is currently under-construction and still witnessing a lot of interest from multinational/corporate office occupiers to pre-commit space in lieu of their consolidation/expansion needs. Similarly, Ambience Corporate Tower 2 (part of an integrated Ambience Island on NH 8), admeasuring 1.2 million sq ft commercial development, is operational and has witnessed a lot of traction from multinational occupiers like Amazon, Mark it, Panasonic, Sabic and the likes in the recent past for similar reasons,” said Vineet Anand, Director-Office Services, Colliers International India.
In H1 2017, gross absorption amounted to 1.7 million sq ft with technology, telecom and BFSI sectors being positioned at the forefront in terms of overall leasing activity. As per Colliers Research, Golf Course Extension Road has started witnessing traction from several occupiers. With significant supply pipeline, availability of quality Grade A space and increased connectivity, Golf Course Extension Road is set to become one of the next preferred choice for technology sector occupiers in the times ahead.
“Significant new supply over 2017 should keep the rents in check in peripheral and off CBD locations in Gurgaon, while the low vacancy markets such as DLF Cyber City, Golf Course Road may witness a further upward pressure on rents especially in grade A office developments. For instance, despite a steady supply and overall high vacancy rates in Gurgaon, average rents increased by around 0.9% in Q2 2017 in comparison to Q1 2017. This was due to the fact that a few premium office establishments demanded rentals over the market rate in locations like DLF Cyber City and Golf Course Road,” said Surabhi Arora, Senior Associate Director, Research, Colliers International India.
As per Colliers research, Gurgaon office market is also witnessing a lot of traction from co-working operators who accounted close to a 20% share in total leasing activity in Q2 2017. Recently, GoWork opened a co-working space in Udyog Vihar, which is scalable to more than 700,000 sq ft, indicating the robust market sentiments for flexible office spaces. These co-working spaces are primarily popular among small and medium scale technology driven and start-up firms.
Colliers’ Research predicts that at the backdrop of upcoming supply infusion and growing demand from technology and financial sectors, the leasing momentum should improve in the next two quarters.