Noida Takes The Lead In Office Space Uptake In Delhi/NCR Overtaking Gurgaon

Noida has been consistently topping the charts as Delhi NCR’s best performing market in terms of net office space absorption for four consecutive quarters. However, it still has a lot to cover compared to competitor Gurgaon, which accounts for a major share of offices occupied by large MNCs and KPOs, among others.

During the January-March 2021 quarter, Delhi NCR witnessed a net absorption of 1.07 million sq ft (MSF), a 5% growth Q-o-Q, JLL India said, adding that Noida contributed 55% of the net absorption followed by Gurgaon at 38%. Noida has been consistently outpacing Gurgaon since April-June 2020.

Noida is attracting corporates as it boasts of better road and metro connectivity, affordable housing, abundant power, Grade-A offices, competitive rentals and upcoming international airport and logistics hub. But, analysts point out that it has a lot to do to catch up with Gurgaon in terms of large clients.

“We have to analyse this pragmatically. Last year, if we go by deals in Noida, then one would discover that there is no significant movement of firms from Gurgaon to Noida. What Noida was lucky with was that many clients consolidated their office spaces,” JLL India managing director (north & east India), Manish Aggarwal said.

For instance, a large Indian digital payment company took 5.50 lakh sq ft last year to consolidate six-seven offices spread in Noida into one at Skymark Towers. Another is a South Korean multinational conglomerate consolidating in Sector 62. They took around 3 lakh sq ft. A large private sector bank, too, last year consolidated its offices from Delhi and other places to Noida taking up around 60,000 sq ft at Max Towers, he added.

Elaborating on the changing market preferences of companies in NCR, Aggarwal said, “When you look at Delhi, it has smaller offices, which are usually front offices, anywhere between 20,000 and 30,000 sq ft. It makes a lot of sense for enterprises to move into either Gurgaon or Noida. Traditionally they moved into Gurgaon, closer to the Delhi border. Now they are moving into Noida as they find Grade-A+ buildings with half the cost from Delhi.”

Aggarwal agrees that cost arbitrage and same facilities at cheaper rates is a very good combination, but what Noida lacks compared to Gurgaon is large corporate clients. “Movement from Gurgaon to Noida has been very insignificant because firms in Gurgaon have much larger spaces for back offices, KPOs and software development centre. To move, say 1-2.50 sq ft, it takes a lot of diligence on talent movement, cost amortisations and many other critical factors,” he pointed out.

Overall, the NCR market expected to report a healthy commercial office space take-up and strong demand from IT-ITeS, BFSI and law firms is likely to further fuel the momentum, he noted. On the road ahead, Aggarwal said companies are thinking over two aspects. First, if they downsize, then how much, and second, when will they come back to office.

“Many companies that were planning to re-start offices in December 2020 or June 2021, are now postponing these plans,” he added.

(Source: Financial Express)