IT, ITes firms largest occupiers of office space in 2020

Information technology (IT) and IT-enabled services companies emerged as the biggest occupiers of office real estate in the National Capital Region (NCR) in 2020,

Information technology (IT) and IT-enabled services companies emerged as the biggest occupiers of office real estate in the National Capital Region (NCR) in 2020, with a majority of the companies leasing space in Noida and select areas of Gurugram, such as Golf Course Extension Road, Sohna Road and Udyog Vihar, according to a report by Knight Frank India.

The report said that in 2020, Gurugram witnessed leasing of 1.15 million square feet, as companies shifted locations within the city to sustain operations amid the losses due to Covid-19.

The NCR, as a whole, recorded gross office leasing of 2.6 million sq ft in the second half of 2020, 24% higher than the first half of 2020. The period witnessed 104 deals with an average deal size of 24,765 sq ft.

Locations such as Udyog Vihar, Golf Course Extension Road and Sohna Road have witnessed good traction for office space requirements in the past few months, the report released on Wednesday said.

It also observed that the government-imposed lockdown to combat the spread of the pandemic led to temporary economic inactivity in the second quarter of 2020, as a result of which there was a sharp fall in leasing activities in NCR. However, with the gradual return to normalcy, gross leasing revived to 41% of 2019’s quarterly average in the third quarter and eventually rose to 79% in the fourth quarter, as compared to the same period in 2019. Gurugram and Noida continued to dominate the overall leasing in NCR with 45% and 43% shares, respectively, the report said.

It also said that co-working operators took up spaces selectively across NCR in the second half of 2020. From a 3% share in the first half of 2020’s total leasing, it increased to 12% in the second half of 2020. Co-working operators established office footprints in Delhi, in locations such as Okhla and Defence Colony. In Gurugram, such spaces came up in Udyog Vihar, Qutub Plaza and Sector 45.

The report further said that banking, financial services and insurance (BFSI) sector constituted 13% of the total leasing in the second half of 2020. Apart from Delhi’s Central Business District (CBD) and Secondary Business District locations, such as Nehru Place, Aerocity and Jasola, occupiers also preferred Noida and Golf Course Extension Road in Gurugram.

In comparison, Noida recorded gross office leasing of 0.10 million sq m, with new office spaces and competitive rents driving occupier demand in Noida. In fact, on an annual basis, office space consumption in Noida remained largely on a par with 2019 levels.

Pankaj Singh, a real estate consultant based in the city, said that the pandemic affected commercial real estate business in 2020, but the situation is likely to improve. “Deals have started to take place and employers are likely to start hiring again and with vaccination likely to begin, we can see people returning to offices in the second quarter of 2021. However, the dynamics of office real estate will change and companies are likely to get better deals,” said Singh.