The Delhi-NCR region has witnessed a surge in demand for office space, with Tata Consultancy Services (TCS) leasing 400,000 sq ft in Noida. This marks one of the largest office space transactions in the region.
Renewed Demand for Office Spaces
TCS, India’s largest IT company, has recently asked its employees to resume work from the office. This move, along with the return-to-office policies implemented by other large corporations, has fueled a renewed demand for high-quality office space, especially Grade A properties. According to Vibhor Jain, Managing Director, North India, Cushman & Wakefield, “IT companies have traditionally dominated office space needs, and with most of them having ended work from home, we expect an increase in demand for Grade A office space in the coming quarters.”
Location and Details
TCS has taken up space at Assotech Business Cresterra on the Noida expressway. The complex is spread across a vast area of 2 million sq ft, and the space acquired by TCS is in the last building of the project. Assotech Business Cresterra has already seen other companies like Genpact and Celebal Technologies take space within the complex.
Leasing Trends in Delhi-NCR
Delhi-NCR registered a gross leasing volume (GLV) of 3.7 million sq ft during the last quarter of 2023, the highest volume recorded throughout the year. This represents a 10% increase on a quarter-on-quarter (q-o-q) basis but remains marginally lower than the volumes recorded in the same quarter the previous year. Fresh space take-up accounted for the majority share of the GLV at 83%, while the pre-commitments portion stood at 11%. Surprisingly, the flex space sector surpassed the dominant IT-BPM sector by acquiring a 24% share in leasing during the fourth quarter. The IT-BPM sector held a 23% share.
Increase in Supply and Vacancy Rate
During the last quarter, around 2.9 million sq ft of office space entered the Delhi-NCR market, raising the total annual launches for 2023 to 4.9 million sq ft. The significant rise in supply resulted in a slight increase of 50 basis points in the vacancy rate on a q-o-q basis.
Looking Ahead
Delhi-NCR is projected to witness the upcoming entry of over 19 million sq ft of office space from 2024 until 2026. The prime submarkets of Gurgaon and Noida will contribute approximately 44% of this supply. While this surge in supply is likely to push the vacancy rate higher, there is expected to be a strong demand, which will counterbalance the effect. In conclusion, the leasing of four lakh sq ft of office space by TCS in Noida reflects the resurgence of demand for grade A properties in the Delhi-NCR region. With more companies transitioning back to office-based work, the commercial real estate sector is anticipated to experience continuous growth.
