India’s office sector anticipates 20–22% y-o-y growth in 2024: report

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The office sector anticipates strong 20–22 per cent year-on-year (y-o-y) growth in 2024, according to the JLL report.

In 2023, net absorption in the office market is expected to be on par with 2022, closing at 37–39 million 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.

Further, the office markets’ performance is a testament to the strong fundamentals of demand and the absence of any lasting effects of the global headwinds. In 2024, net absorption is further expected to increase by 20–22 per cent to touch 45-47 mn sq ft. 

Despite a 23.9 per cent 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.

In line with the net absorption, the supply in 2023 will be higher than the 2017-2019 pre-pandemic average. In 2024, it is expected to increase by 22-23 per cent y-o-y to reach 58-60 mn sq ft. It is seen that there is a trend of flight to quality creating demand polarization towards buildings owned by institutional owners and established developers. 

Top seven markets

“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. The increasing importance of sustainability is reflected in the increase in green-certified buildings in the last few years. Green-certified buildings share in Grade A office stock went up from 39 per cent in 2020 to 53 per cent in 2023,” said Rahul Arora, Head, Office Leasing Advisory and Retail Services, India, JLL. 

Meanwhile, vacancies are expected to remain within the 16–17 per cent range by the end of the year. With a strong supply pipeline of 55–60 million square feet lined up in 2024, vacancies are likely to remain sticky at 16–17 per cent on the back of strong demand. Core markets, however, will continue to see single-digit vacancy levels.  

In 9 months 2023, there is a slight decline in space take-up by tech firms, but it 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, increased their participation in leasing activity by establishing Global Capability Centres (GCCs). Notably, GCCs have a 54 per cent share of active office space requirements in the top seven cities of India. 

“In the year 2023, so far, India’s office market has stayed truly on course to see remarkable performance as net absorption is expected to exceed the three-year pre-pandemic average. We are likely to see net absorption of around 37-39 mn sq ft which is further expected to go up by 20-22 per cent y-o-y to reach 45-47 mn sq ft in 2024,” said,Dr Samantak Das, Chief Economist and Head of Research and REIS, India, JLL.  

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 145,000 seats. the first 9 months, of 2023 already accounts for 80 per cent of the total seats leased in the full year 2022.

In 2024, around 150,000 seats are expected to be leased by the flex segment. There is sustained demand for flex as an essential element of occupier strategies, which now assimilate both conventional and on-demand flex spaces for portfolio optimization and a better employee experience. 

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