Office sector likely to witness net absorption of 37-39 mn sq ft in 2023 - Hindustan Times
close_game
close_game

Office sector likely to witness net absorption of 37-39 mn sq ft in 2023

Dec 18, 2023 02:39 PM IST

Average office net absorption to increase by 20-22% year-on-year in 2024, touching 45-47 mn sq ft

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’.

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. (Pixabay)
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. (Pixabay)

A strong growth of 20-22% YoY is anticipated in 2024 and may touch 45-47 mn sq ft, it said.

HT launches Crick-it, a one stop destination to catch Cricket, anytime, anywhere. Explore now!

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.

Also Read: New Special Economic Zone rules have the potential to unlock around 15 to 18 mn sq ft of operational SEZ space

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.

“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.

Also Read: Air India leases 6.2 lakh sq ft commercial real estate space in Gurugram at an annual rent of 90 crore for 21 years

“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.

Unlock a world of Benefits with HT! From insightful newsletters to real-time news alerts and a personalized news feed – it's all here, just a click away! -Login Now!
SHARE THIS ARTICLE ON
Share this article
  • ABOUT THE AUTHOR
    author-default-90x90

    Follow the latest breaking news and developments from India and around the world with Hindustan Times' newsdesk. From politics and policies to the economy and the environment, from local issues to national events and global affairs, we've got you covered.

SHARE
Story Saved
Live Score
OPEN APP
Saved Articles
Following
My Reads
Sign out
New Delhi 0C
Wednesday, April 17, 2024
Start 14 Days Free Trial Subscribe Now
Follow Us On