Covid-hit Gurugram falls behind on office rentals

Landlords and tenants of commercial office spaces in Gurugram are renegotiating rentals as they seek to overcome the fallout of the coronavirus pandemic on the office leasing market in the city that has, in recent years, become the Indian base of some of the world’s biggest companies.

Most tenants, especially middle-rung companies, are seeking waivers and deferment of rental payments to tide over the impact of the public health crisis that forced a 68-day national lockdown till May 31 with some restrictions remaining to date. Landlords have no option but to renegotiate in the backdrop of an emerging trend of desperate tenants surrendering office space in neighbourhoods such as Udyog Vihar, Sohna Road, even Golf Course Road, a premium address

The impact of the pandemic has been so drastic that Gurugram was pushed to second place for the first time in seven years in office leasing activity in the first half of this year, according to a report by the property consultant Knight Frank. According to the report, more office space was leased in Noida in January-June as supply was available at much lower rentals in the satellite city.

According to the report, 0.92 million sq ft office space was leased in Gurugram in the first six months of 2020 compared with 1.08 million sq ft in Noida. Noida outperformed Gurugram in terms of overall transactions and became the highest contributor to gross leasing in the National Capital Region market, posting a year-on-year increase of 86%. It came against the backdrop of a 45% decline in gross leasing by area in the NCR in the first six months of 2020. “Demand for office spaces has been growing in Noida mainly due to relatively high rentals in Gurugram’s established office space locations such as DLF Cyber City, Golf Course Road, MG Road and Udyog Vihar,” Knight Frank said, adding that better roads, improved metro rail connectivity and competitive rentals helped Noida pip Gurugram.

Over the years, Gurugram has emerged as a powerful magnet for both domestic and multinational companies as available commercial space in New Delhi shrank and rentals soared. Today, it is the India corporate base of companies ranging from insurers Aviva and Max Life to consultant McKinsey and beverage maker PepsiCo, and home to the factories of automakers Maruti Suzuki and Hero MotorCorp, and airlines IndiGo and SpiceJet.

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