Leasing activity continues to show tremendous momentum with the Q3 (July-September 2024) numbers at 19.89 million sq. ft, the second highest ever quarterly gross leasing volumes, JLL reported on Wednesday. Interestingly, both quarters with the highest gross leasing numbers have been recorded in the post-Covid period, indicating the period of intense growth and robust demand that the India office market is currently witnessing.

For the nine-month period between January and September 2024, gross leasing volumes stood at 53.43 million sq. ft, the highest ever for this period and unmatched in the history of India’s office market. The strong fundamentals clearly have put India on track to witness a record-breaking year with projected gross leasing activity anticipated to hit 70 million sq. ft in 2024, surpassing the previous high seen just last year (2023).

Office Market Continues To Build On Its Gains

The office market continues to build on its gains as the strong momentum is underpinned by demand across industry segments from both global and domestic firms.  As India remains at the forefront of global firms RE plans and domestic economy stays resilient, occupier activity is on an accelerated growth curve with an anticipated longer runway going forward as well.

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. 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 50% share in India’s gross leasing activity for January-September 2024.

India's Position As 'Office Of The World' Remains Intact

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. 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 ~48% from 2022 till Sep 2024 compared to the ~35% share in the 2017-2019 period. The strong domestic occupier activity is also a key driver of resilience and renewed RE appetite in the India office market.

"India’s office market has seen flex emerge as a powerhouse occupier segment," said Dr Samantak Das, Chief Economist and Head of Research and REIS, India, JLL. "Flex operators have claimed an unprecedented 22% of Q3 leasing activity, surpassing traditional frontrunners like Tech and BFSI. With a record-breaking 4.38 million sq. ft leased in Q3 alone, and 10.23 million sq. ft in the first nine months of 2024, the flex segment is on track to shatter its previous annual record set at 10.4 million sq. ft in the year 2019. This trend, coupled with strong showings from Tech, BFSI, and manufacturing sectors, signals a more diverse and resilient office market. We're witnessing a transformative period where India's commercial real estate landscape is becoming increasingly broad-based and adaptable to evolving workplace dynamics," he added.

India’s office market is becoming more broad-based, with a secular share emerging among various occupier categories. 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.