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 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.

“The resilience of Global Capability Centers in India is unmistakable, commanding a 36.2% share of total leasing in Q3. What's truly noteworthy is the driving force behind this growth: manufacturing/engineering and BFSI sectors. This underscores India's exceptional talent pool across diverse industries. The trend has held steady throughout the first nine months of 2024, with BFSI, manufacturing/engineering, and tech sectors showing comparable shares in GCC space takeup. This signals a growing demand for advanced R&D and innovation work across the board. With Karnataka's new GCC Policy offering incentives and other states likely to follow suit, we're poised for a significant boost to the ecosystem. This could usher in a fresh wave of GCCs while encouraging existing players to expand, capitalizing on India's quality talent pool. The future looks promising for GCCs in India,” said Rahul Arora, Head - Office Leasing & Retail Services, Senior Managing Director (Karnataka, Kerala), India, JLL.

India’s net absorption for the top seven cities stood at 12.16 million sq. ft, up by a healthy 14.9% Qo-Q. In the quarter, Bengaluru accounted for 34.1% share of net absorption, followed by Delhi NCR, Mumbai, and Pune with near similar shares of 15.8%, 15.2% and 14.8%, respectively. On a ninemonths basis, net absorption is 31.03 million sq. ft, up by 19% Y-o-Y for the same period last year. This indicates continuous expansion-driven activity which supports aggregate headcount growth and capacity augmentation for both global as well as domestic firms. In fact, over the past decade, JanSep 2024 aggregate net absorption for India is second only to 2019 same period numbers. During the nine-month period, Bengaluru, Delhi, and Mumbai lead the net absorption figures and combined for a 63.2% share.

Overall vacancy for the top seven cities was recorded at 16.8%, the lowest in two years as new space take-up remains robust. Vacancy also reduced Q-o-Q across Bengaluru, Chennai, Delhi NCR, and Kolkata.

Outlook: The office markets’ growth momentum is expected to pivot around expansion by existing GCCs and new entrants marking their presence in the country. Activity will remain centered around the core tech cities and other multi-sectoral ones based on the maturity levels of GCCs and their existing footprint in the country. Broad-based GCC activity across sectors will remain a key theme that supports sustained activity from this segment. Domestic occupier activity is expected to circle around flex operators, financial services firms, manufacturing/engineering players and tech outsourcing majors. As India builds on its services economy platform and makes a play for the global manufacturing pie, the office market is poised to ride the tailwinds of the strong economic story and propel itself to greater heights.

*Gross leasing refers to all lease transactions recorded during the period, including confirmed pre-commitments, but does not include term renewals. Deals in the discussion stage are not included.

**Net absorption is calculated as the new floor space occupied less floor space vacated. Floor space that is pre-committed is not considered to be absorbed until it is physically occupied.

JLL is India’s premier and largest professional services firm specialising in real estate. The Firm has grown from strength to strength in India for the past two decades. JLL India has an extensive presence across 10 major cities (Mumbai, Delhi NCR, Bengaluru, Pune, Chennai, Hyderabad, Kolkata, Ahmedabad, Kochi, and Coimbatore) and over 130 tier-II and III markets with a cumulative strength of over 15,000 professionals. The Firm provides investors, developers, local corporates, and multinational companies with a comprehensive range of services. These include leasing, capital markets, research & advisory, transaction management, project development, facility management and property & asset management. These services cover various asset classes such as commercial, industrial, warehouse and logistics, data centres, residential, retail, hospitality, healthcare, senior living, and education. For further information, please visitjll.co.in