Office leasing touches 33.5 mn sq ft in the first half of the year, up by 29%: JLL

Office demand across seven major cities hit an all-time high in the first half of this calendar year with gross leasing of 33.54 million square feet, according to JLL India.

Real estate consultant JLL India on July 3 said that office demand for the January-June period of this year witnessed a 29% annual growth in gross leasing to 33.54 million sq ft across the seven cities — Delhi-NCR, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad and Pune.

Gross leasing of office space stood at 26.01 million square feet in the January-June period of 2023.

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.

Gross leasing activity in Q2 2024 (April-May-June) were recorded at 18.38 million sq. ft, up by 21.3% Quarter-on-Quarter (Q-O-Q), the report said.

In Q2, global occupiers accounted for a significant 59.3% share of gross leasing volumes. Nevertheless, domestic occupiers continue to show strong momentum, representing a 48.4% share of India’s gross leasing activity since 2022, it noted.

Also Read: Flex office space contributes to more than one-third of Delhi-NCR’s office leasing activity in Q1 2024

Tech sector made a comeback, fuelling optimism as BFSI, manufacturing/engineering and industries maintain strong performances. Tech saw its strongest performance in two years, with its share of Q2 gross leasing at 31.5%.

BFSI also had a strong showing, accounting for a 20.3% share, followed by the manufacturing/engineering segment with a 17.3% share. Flex operator activity remained resilient with a 14.6% share of leasing activity in Q2. This segment remains on track to match its previous historic highs.

The net absorption figures across the top seven cities stood at 10.58 million sq. ft, a significant improvement of 27.5% Q-o-Q. On a H1 comparison, there was a 22.7% Y-o-Y increase, indicating sustained expansion-driven activity that has led to firms, both global and domestic, adding to their aggregate headcount.

Also Read: Office leasing records 16.7 mn sq ft in Q1 2024, witnessing a 20% growth y-o-y

The net absorption during the quarter was led by Delhi NCR with a share of 22.9%, followed by Bengaluru with 20.62% and Mumbai with 15.2% shares, respectively. In the half yearly analysis, these three cities maintained their top positions, the report noted.

Bengaluru leads in Q2 office leasing activity

Bengaluru led the charge, accounting for a 33% share of the quarterly gross leasing, followed by Delhi NCR with a 20.7% share. These two cities have been interchanging their positions in the top two for some time but remain the markets with maximum occupier activity.

In fact, for Bengaluru, Q2 2024 gross leasing was its third highest ever. Hyderabad and Mumbai also recorded strong leasing activity with respective shares of 13.1% and 12.2%. This was the first quarter when all seven cities under review, recorded gross leasing levels exceeding 1 million sq. ft. This was on account of the strong performance recorded by Kolkata in the quarter.

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“As global economic and business conditions stabilize, global occupiers are now more certain of their real estate plans, with India being at the top of their list for footprint expansion and growth. In Q2, global occupiers accounted for a significant 59.3% share of gross leasing volumes. Nevertheless, domestic occupiers continue to show strong momentum, representing a 48.4% share of India’s gross leasing activity since 2022,” said Samantak Das, Chief Economist and Head of Research and REIS, India, JLL

“The India office growth story is strongly supported by the remarkable growth shown by GCCs in Q2. With a substantial 42.6% share of the total leasing in Q2, the GCCs continue to remain the dominant occupier group, accounting for over one-third of gross leasing activity so far in 2024,” said Rahul Arora, Head (Office Leasing & Retail Services), India, JLL.

India’s leadership position in the GCC ecosystem continues to remain intact, driven by high-end R&D work that supports headcount expansion opportunities for these firms, resulting in strong space demand. What is most remarkable is that 2024 is projected to mark record breaking gross leasing of 65-70 million sq. ft, setting the stage for a historic milestone in the country’s commercial real estate market, he said.

Going forward

The year 2024 is projected to mark record breaking gross leasing of 65-70 million sq. ft, setting the stage for a historic milestone in the country’s commercial real estate market, the report added.