The office sector has witnessed sustained growth in demand in 2023 despite the global sluggishness and the net absorption in office market is expected to be at par with 2022 to close at 37-39 mn sq ft, according to JLL recent report titled ‘2023: A Year in Review’.
A strong growth of 20-22% YoY is anticipated in 2024 and may touch 45-47 mn sq ft, it said.
Net absorption from Jan-Sep 2023 was at 26 mn sq ft which is 68% of 2022 full year number. In 2023, net absorption in the office market is expected to be at par with 2022 to close at 37-39 mn sq ft. With leasing activity expected to further pick up pace in the last quarter of 2023, the year is expected to surpass the 2017-2019 average.
In 2024, net absorption is further expected to increase by 20-22% to touch 45-47 mn sq ft. Despite a 23.9% year-on-year decrease in supply during the first nine months of 2023, it is anticipated to strengthen and reach approximately 47-49 mn sq ft by the end of the year, it said.
{{/usCountry}}In 2024, net absorption is further expected to increase by 20-22% to touch 45-47 mn sq ft. Despite a 23.9% year-on-year decrease in supply during the first nine months of 2023, it is anticipated to strengthen and reach approximately 47-49 mn sq ft by the end of the year, it said.
{{/usCountry}}“The office space in India's top seven markets is expected to increase to over 800 mn sq ft by the fourth quarter of 2023, up from the current 792.8 mn sq ft as of September 2023. ESG continued to remain a decisive action point for all stakeholders in 2023 as energy consumption, green and net zero commitments are driving corporate action. Green certified buildings share in Grade A office stock went up from 39% in 2020 to 53% in 2023 (as of September 2023),” said Rahul Arora, Head - Office Leasing Advisory and Retail Services, India, JLL.
Vacancy expected to remain within the 16-17% range by the end of the year
With a strong supply pipeline of 55-60 mn sq ft lined up in 2024, vacancy is likely to remain sticky at 16-17% on the back of strong demand. Core markets, however, will continue to see single digit vacancy levels.
Slight decline in space take-up by tech firms; GCCs strengthen footprint
In the nine-month period in 2023, there is a slight decline in space take-up by tech firms but is still likely to account for the biggest share in gross leasing by the end of the year. Other segments such as manufacturing/industrial, BFSI and Consulting through setting up of Global Capability Centres (GCCs) strengthened their participation in leasing activity.
Interestingly, GCCs have a 54% share in active office space requirements in top seven cities of India, the report said.
“We are likely to see net absorption of around 37-39 mn sq ft which is further expected to go up by 20-22% y-o-y to reach 45-47 mn sq ft in 2024. India’s innovation-led ecosystem, large talent pool and favorable policy initiatives will create a perfect growth tide for the office sector to flourish further in 2024, ” said, Samantak Das, Chief Economist and Head of Research and REIS, India, JLL.
Flex continues to drive market activity.
With sustained demand for flexible and managed enterprise services, flex leasing in 2023 is expected to surpass the previous peak achieved in 2022 to close at around 145,000 seats. Nine months of 2023 already saw around 80% of the total seats leased in the full year 2022. In 2024, around 150,000 plus seats are expected to be leased by flex segment.