Major Cities Witness 15.16 Million Sq Ft Gross Office Leasing Surge in March Quarter: JLL India Report

The Indian office market is witnessing a significant surge in gross leasing activity, marking a promising start to 2024.

The Indian office space leasing market is experiencing a remarkable surge, marking a promising start to 2024. According to a recent report by JLL India, the gross leasing activity in the first quarter of 2024 reached an impressive 15.16 million sq ft. This surge reflects a substantial 13.8% increase compared to the same period last year, making it the second-highest gross leasing activity ever recorded for a first quarter. The consistent growth in leasing activity over the past three quarters hints at the potential for a record-breaking year in the Indian office market.

Driving Forces:

One of the significant driving forces behind this surge is the increasing demand from domestic occupiers, particularly in sectors such as Banking, Financial Services and Insurance (BFSI), flexible workspaces, and manufacturing/engineering. These sectors collectively contributed to 53% of the total leasing activity, underscoring the resilience and adaptability of the Indian office market.

Top Performers:

Delhi NCR emerged as the top performer, witnessing a gross leasing area of 4.03 million sq ft, slightly surpassing its previous Q1 record. Strong demand from domestic players, particularly in the flex space segment, played a crucial role in driving leasing activity in the region. Bengaluru and Chennai followed closely behind, with 3.09 million sq ft and 2.67 million sq ft of leasing, respectively. All four major cities – Delhi NCR, Bengaluru, Chennai, and Pune – experienced historic highs in gross leasing activity compared to previous first quarters.

Rise of Flexible Workspaces:

One of the notable trends highlighted in the report is the growing popularity of flexible workspaces. Flex space operators witnessed remarkable growth, with Delhi NCR alone recording a record-breaking quarterly space take-up of 1.42 million sq ft. This trend reflects a growing preference for flexible workspace solutions among businesses, indicating a shift towards more agile and adaptable work environments.

Expanding Manufacturing/Engineering Sector:

The manufacturing/engineering sector also witnessed significant growth, accounting for 20.2% of gross leasing – the highest in nearly three years. This growth can be attributed to India's expanding Global Capability Centres (GCC) ecosystem, which is attracting high-end R&D work and driving expansion-led space demand.

Challenges in the Tech Sector:

Despite the overall growth in leasing activity, the tech sector continues to face challenges. Space take-up by third-party outsourcing firms has been relatively stagnant, impacted by global headwinds and slower revenue growth.

Outlook for Continued Growth:

Looking ahead, industry experts anticipate a significant acceleration in corporate space take-up in the latter half of 2024, potentially surpassing the 63 million sq ft recorded in 2023. Factors such as the entry of new Global Capability Centres (GCCs), expansion of existing ones, and favorable government policies for the manufacturing sector are expected to drive this growth. The continued momentum of flexible workspaces and a potential revival in tech outsourcing are also likely to contribute to India's office market reaching new heights in the coming quarters.

This surge in office leasing activity underscores the resilience and potential of the Indian office market, positioning it as a key player in the global commercial real estate landscape.

Image source- gofloaters.com