Office leasing at 18-month high of 10.37 mn sq ft in Q2

he net leasing of office space rose 5 per cent to 10.37 million square feet in July-September across seven cities despite global headwinds, according to JLL India. The net absorption of office space stood at 9.86 million square feet in the corresponding period of the last year.

Real estate consultant JLL India on Monday released its office market data for July-September, stating that India's office net absorption recorded its strongest quarter in an 18-month period. JLL India Head Office Leasing Advisory Rahul Arora said, "India's office market performance in Q3 (July-September) is a testament to the strong fundamentals of demand and the complete absence of any lasting effects of the global headwinds, except delayed decision-making".

This strong leasing momentum is driven by India's tech ecosystem, which is seeing strong offshoring and R&D work across multiple sectors, he added. "GCCs (Global Capability Centres) accounted for a 44 per cent occupier share in Q3 in terms of operations. This multi-year trend is expected to keep the Indian office markets among the most growth-oriented globally," Arora said.

According to the data, the net leasing of office space increased in Bengaluru to 2.38 million square feet in July-September from 1.71 million square feet in the year-ago period. In Chennai, the net leasing rose to 0.9 million square feet from 0.54 million square feet. Net absorption of office space in Delhi-NCR grew to 1.7 million square feet from 1.61 million square feet.

In Pune, the demand was stable at 1.01 million square feet, while the leasing rose marginally in Kolkata to 0.14 million square feet from 0.10 million square feet. However, the demand remained subdued in Hyderabad and Bengaluru. Hyderabad witnessed a decline in net office leasing to 2.7 million square feet from 3.06 million square feet. Mumbai saw a fall in net leasing of office space to 1.53 million square feet during the third quarter of this calendar year against 1.83 million square feet in July- September 2022.

Amal Mishra, co-founder of Bengaluru-based flex space operator UrbanVault, said, "While the global economic scenario and a sluggish IT industry have caused a minor disruption in office leasing, it's important to note that the demand for Grade A office spaces and managed flexible workspaces remains steady".

There is a balanced alignment of demand and supply within this segment, he added. According to JLL India, the net absorption is calculated on the basis of new floor space occupied less floor space vacated. Floor space pre-committed is not considered to be absorbed until physically occupied, it added. Last week, real estate consultant Colliers India reported a 2 per cent increase in gross leasing of office space across six major cities to 13.2 million square feet during the July-September period.

Cushman & Wakefield data showed that gross absorption of office space across eight major cities fell 13 per cent to 15.11 million sq ft during the third quarter of this calendar year from 17.37 million sq ft in the corresponding period of the previous year.