Office supply totaling 11 million sq ft expected in Gurugram by 2020: Colliers Research
As per Colliers Research, Golf Course Extension Road has a significant supply pipeline of quality Grade A space, making it one of the next preferred choice for technology sector occupiers.
At least 11 million sq ft of office supply is expected by 2020 in Gurugram -- most of which would be along the Golf Course Extension Road and parts of NH-8 micro markets. A considerable proportion of this supply would be in the form of IT/ITeS SEZ developments, says a report by Colliers Research.
Over the last decade, due to limited supply in micromarkets in Delhi and availability of ample Grade A office supply in Gurugram’s micromarkets, the focus of several multinationals/office occupiers has shifted to Gurugram, especially the occupiers in IT and ITeS sector, it says.
In the first half of 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 Gurugram, 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 Gurugram, average rents increased by around 0.9 percent in the second quarter of 2017 in comparison to the first quarter in 2017. This was due to the fact that few premium office establishments demanded rentals over the market rate in locations like DLF Cyber City and Golf Course Road,” says Surabhi Arora, Senior Associate Director, Research, Colliers International India.
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, it says.
Further, being closer to Delhi, certain pockets of NH 8 (which are in the beginning of Gurugram 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.
Projects like DLF Cyber Park, an upcoming state-of-the-art admeasuring 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 which is operational 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.
As per Colliers research, the Gurugram office market is also witnessing a lot of traction from co-working operators who accounted close to a 20 percent share in total leasing activity in the second quarter of 2017. Recently, GoWork opened a coworking space in Udyog Vihar which is scalable to more than 700,000 sq ft indicating the robust market sentiments for flexible office spaces.These coworking 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.