MUMBAI: Gross leasing activity in Q3 touched 19.89 million square feet (msqft) up 8.2 per cent on-quarter making it the second-best quarter, making the total area leased out so far this year to 53.43 msqft.
If the trend maintains, which looks more likely than not, the market is on the course to cross the 70 msqft by December.
The best quarter ever for the market was December 2023, according to a report from industry tracker JLL, which attributed the robust growth to the demand from the flexible workspace segment and Global Capability Centres (GCCs). Interestingly, both quarters with the highest gross leasing numbers have been recorded in the post-Covid period.
Flex has become the highest contributor to quarterly gross leasing for the first time, with a 22 per cent share even as GCCs remain the dominant occupier group, driving 36.2 per cent of all leasing activity.
As a result, global occupiers continue to drive the market with a 56.8 per cent share, JLL said Wednesday.
Bengaluru continues to lead with a 24.6 per cent share of leasing, followed by Delhi NCR with 23.1 per cent. Mumbai and Hyderabad had 15.6 per cent and 14.9 per cent respectively.
For the nine-month period of 2024, gross leasing volumes stand at 53.43 msqft, the highest ever, and the year is on track to be a record-breaking with projected gross leasing activity anticipated to hit 70 msqft. The leading cities in the nine-month period are Bengaluru, Delhi NCR and Mumbai with a combined share of 63.6 per cent.
India’s position as the office-to-the-world remains intact as global occupiers continue to drive their real estate expansion here. In Q3, they remained active with a 56.8 per cent share of gross leasing volumes. On a cumulative basis so far this year, GCCs account for a 55.5 per cent share, with the domestic occupiers accounting for 44.5 per cent.
Their post-Covid share in gross leasing stands at 48 per cent from 2022 till September 2024 compared to the 35 per cent share in the 2017-19 period.
The domestic office market has seen flex emerge as a powerhouse occupier segment. Flex operators have claimed an unprecedented 22 per cent of Q3 leasing activity, surpassing traditional frontrunners like tech and BFSI. With a record-breaking 4.38 msqft leased in Q3 alone and 10.23 msqft in the first nine months, the flex segment is on track to better its previous annual record of 10.4 msqft in 2019.
Tech’s share is down to with 17.9 per cent, BFSI at 16.5 per cent and manufacturing/engineering at 13.8 per cent.
Net absorption in the top seven cities stood at 12.16 msqft, up by a healthy 14.9 per cent on-quarter, led by Bengaluru at 34.1 per cent share of net absorption, Delhi NCR, Mumbai and Pune with near similar shares of 15.8, 15.2 and 14.8 per cent, respectively.
The growth momentum is expected to pivot around expansion by existing GCCs and new players entering the country. Activity will remain centred around the core tech cities and other multi-sectoral ones based on the maturity levels of GCCs and their existing footprints.