Office leasing in India saw a notable uptick, surging to an 18-month high of 10.37 million square feet during July to September, despite facing global challenges, as per a report by JLL India. This represents a 5% increase compared to the same period last year when net absorption stood at 9.86 million square feet.
JLL India’s office market data for July-September highlights the resilience of India’s office space demand. Rahul Arora, Head of Office Leasing Advisory at JLL India, attributed this robust performance to strong demand fundamentals and minimal impact from global challenges, except for delayed decision-making.
Arora emphasized that India’s tech sector played a pivotal role in this leasing surge, with significant offshoring and R&D activities across various sectors. Global Capability Centres (GCCs) contributed significantly, accounting for 44% of occupier share during the third quarter. This trend is expected to drive ongoing growth in India’s office markets on a global scale.
Breaking down the data by city, Bengaluru led the way with net office leasing increasing from 1.71 million square feet in the same period last year to 2.38 million square feet in 2023. Chennai followed suit, with net leasing rising to 0.9 million square feet from 0.54 million square feet. Delhi-NCR witnessed growth in net absorption, reaching 1.7 million square feet from 1.61 million square feet, while Pune remained stable at 1.01 million square feet. Kolkata also experienced a marginal increase, rising to 0.14 million square feet from 0.10 million square feet.
In contrast, Hyderabad and Mumbai faced subdued demand. Hyderabad saw a decline in net office leasing, dropping to 2.7 million square feet from 3.06 million square feet, while Mumbai reported a decrease in net leasing to 1.53 million square feet in the third quarter of 2023, compared to 1.83 million square feet during the same period in 2022.
Amal Mishra, co-founder of Bengaluru-based flex space operator UrbanVault, noted that while the global economic landscape and a sluggish IT industry caused a minor disruption in office leasing, demand for Grade A office spaces and managed flexible workspaces remained steady, indicating a balanced alignment of demand and supply in this segment.
JLL India calculates net absorption based on new floor space occupied minus floor space vacated, with pre-committed floor space considered absorbed only when physically occupied.
In a related report, Colliers India reported a 2% increase in gross leasing of office space across six major cities to 13.2 million square feet during July-September, while Cushman & Wakefield data showed a 13% decline in gross absorption of office space across eight major cities, falling to 15.11 million square feet during the same period in 2023 compared to 17.37 million square feet in the previous year.