GURGAON: Udyog Vihar and Sohna Road have emerged as the most popular office spaces in Gurgaon, accounting for 36% and 15%, respectively, of commercial leasing in the first quarter of 2017, property consultancy Colliers International said in a report.
CyberCity, a DLF property, and MG Road accounted for about 8% and 5%, respectively, of overall demand.
According to Colliers, the popularity of Udyog Vihar and Sohna Road indicates an increased inclination towards cost-effectiveness among corporate occupiers. The consultancy said the share of hotspots such as CyberCity and MG Road and other central locations may reduce further in the coming quarters as companies with leases due to expire seek alternative locations due to limited choice of premises and high rents.
“Tenants looking for large floor plates in affordable rents are likely to evaluate options in second-generation buildings in the Udyog Vihar and institutional sectors due to high rents in preferred micromarkets such as CyberCity and Golf Course Road,” said Surabhi Arora, senior associate director at Colliers International. “Occupiers may also look to Golf Course Extension Road for their future expansion requirement as the recent completion of Rapid Metro corridor has improved the connectivity of this location significantly.”
As metro connectivity along Golf Course Road and Golf Course Extension Road attracts corporate interest, traditional markets such as Udyog Vihar and NH8 should continue to gain traction due to locational advantages and affordable rents, according to the report.
Office leasing in Gurgaon fell to about 0.84 million square feet during January-March, down 11% from the October-December quarter. According to Colliers, 0.75 million sq. ft. of pre-commitments in buildings being constructed indicates healthy demand in the Gurgaon market.
About 1.32 million sq. ft. of new office space was released in the Gurgaon market during the first quarter of 2017, mainly on the Southern Peripheral Road and Golf Course Extension Road. Major completions included Enovation Centre in Sector 75, which added over 0.55 million sq. ft., and GoodEarth Business Bay in Sector 58, which contributed 0.35 million sq. ft. Two smaller buildings, Novus Tower in Sector 18 and Reach Commercial in Sector 71, added 0.42 million sq. ft. to the total stock.
Significant supply is scheduled for completion in the coming quarters, mainly along Golf Course Extension Road and NH-8. Special economic zone supply equal to 1.2 million sq. ft. is due to be delivered by the end of 2017 on Golf Course Extension Road. This new supply is likely to draw the attention of large IT occupiers due to low vacancy in other SEZs.
With the enhanced competition from emerging corridors, landlords in central locations have become cautious about their rental expectations.
Average rentals on MG Road declined 4% in the first quarter of this year and fell 2% on Golf Course Road as property owners remained flexible during negotiations.
“We expect demand to remain strong in the coming quarters backed by technology and BFSI (banking, financial services and insurance) firms. We expect vacancy to inch upwards considering that significant supply is scheduled for completion in the next three quarters. Overall rents are likely to remain stable,” said Arora.
(source by:-The Economic Times)