Office space leasing touches 53.43 million sq ft in Jan-Sep period: JLL

Office space leasing for the nine-year period from Jan-Sep 2024 across the top seven cities stood at 53.43 million sq ft. The projected gross leasing activity is anticipated to hit 70 million sq ft in 2024, surpassing the previous high seen last year, a report by JLL showed.
Gross leasing activity in the July-September 2024 quarter touched 19.89 million sq ft, the second highest ever quarterly gross leasing volumes, it said.
Gross leasing refers to all lease transactions recorded during the period, including confirmed pre-commitments, but does not include term renewals. Deals in the discussion stage are not included.
Net absorption of office space for the top seven cities stood at 12.16 million sq. ft in the third quarter of the fiscal year as against 10.69 sq ft in the year ago period indicating a growth of 14.9% Q-o-Q, the report showed.
In the quarter, Bengaluru accounted for 34.1% share of net absorption, followed by Delhi NCR, Mumbai and Pune with near similar shares of 15.8%, 15.2% and 14.8%, respectively. On a nine-months basis, net absorption is 31.03 million sq. ft, up by 19% Y-o-Y for the same period last year, the report showed.
Also Read: Office leasing touches 33.5 mn sq ft in the first half of the year, up by 29%: JLL
Net absorption is calculated as the new floor space occupied less floor space vacated. Floor space that is pre-committed is not considered to be absorbed until it is physically occupied.
The office markets’ growth momentum is expected to pivot around expansion by existing GCCs and new entrants marking their presence in the country. Activity will remain centered around the core tech cities and other multi-sectoral ones based on the maturity levels of GCCs and their existing footprint in the country. Domestic occupier activity is expected to circle around flex operators, financial services firms, manufacturing/engineering players and tech outsourcing majors.
On a nine months’ basis, the leading cities in terms of gross leasing activity are Bengaluru, Delhi NCR and Mumbai with a combined share of 63.6%.
Bengaluru remained the leader for the second straight quarter with a 24.6% share of the quarterly leasing activity, followed by Delhi NCR with a 23.1% share. These two cities have been interchanging their positions in the top two for some time but remain the markets with maximum occupier activity, the report showed.
Strong leasing activity was also recorded in Mumbai and Hyderabad in Q3, with their respective shares at 15.6% and 14.9%. Both these cities now combine for a around 50% share in India’s gross leasing activity for January-September 2024.
On a nine-month comparison, the January-September 2024 period is the highest ever for all cities, barring Chennai and Hyderabad. For Chennai the Jan-Sep 2024 is just 6.1% lower than its all-time high seen last year. For Hyderabad, the nine-month data is lower only to its 2019 performance, the report showed.
India’s position as ‘office to the world’ remains intact as global occupiers continue to drive their real estate expansion plans in India. In Q3, they remained active with a 56.8% share of gross leasing volumes.
On a cumulative basis, for Jan-Sep 2024, global occupiers have accounted for a 55.5% share, the report said.
Domestic occupiers have continued to remain active and now account for a 44.5% share in the nine months of 2024. Their post-COVID share in gross leasing stands at around 48% from 2022 till September 2024 compared to the around 35% share in the 2017-2019 period.
Flex for the first time emerged as the biggest occupier category with a 22.0% share in Q3 leasing activity, followed by tech with 17.9%, BFSI at 16.5% and manufacturing/engineering at 13.8%.
For the January-September 2024 period, tech leads with a 24.4% share, with flex accounting for a 19.2% share. BFSI and manufacturing/engineering are also major occupier sectors with their shares at 17.8% and 16.8%, respectively.
Also Read: Flex office space contributes to more than one-third of Delhi-NCR’s office leasing activity in Q1 2024
“India’s office market has seen flex emerging as a powerhouse occupier segment,” said Samantak Das, Chief Economist and Head of Research and REIS, India, JLL.
“With Karnataka’s new GCC Policy offering incentives and other states likely to follow suit, we’re poised for a significant boost to the ecosystem. This could usher in a fresh wave of GCCs while encouraging existing players to expand, capitalizing on India’s quality talent pool. The future looks promising for GCCs in India,” said Rahul Arora, Head – Office Leasing & Retail Services, Senior Managing Director (Karnataka, Kerala), India, JLL.