The total leasing of office space, which includes demand for all grades of buildings, increased 93 percent year over year to 3.2 million square feet in January across seven major cities, according to a report released by property consultant JLL India.
The report titled Q4 2022 Office Market Update for India, showcases the current trends and insights in the country's office market and provides an in-depth analysis of the market's performance in the fourth quarter of 2022.
JLL also noted that leasing decreased by 56 percent from December 2022, when 7.4 million square feet of office space were leased.
The total area under lease as of January 2022 was 1.7 million square feet.
The top seven cities' total office market leasing activity includes deals for all classes of buildings or types of structures (Delhi-NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Pune and Kolkata).
The information contains term extensions and confirmed pre-commitments. Transactions that are still in the negotiating phase are excluded.
JLL India said that fresh leasing, which included expansion and relocation-driven space take-up accounted for 87 percent of all recorded transactions during the last month.
"The month of January is typically a slow period, as the holiday season for global corporates and future business planning take precedence. Mostly deals that slipped due to certain reasons get concluded during this month," JLL India said.
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In January 2023, the top three cities in that order were Delhi NCR, Chennai, and Mumbai, accounting for 77 percent of monthly leasing activity. The vacancy rates have also shown a declining trend, with a decrease of 60 basis points on a quarterly basis. The report suggests that this trend is expected to continue in the near future.
"IT sector is presently facing slower employment and sluggish corporate growth expectations. As a result, space take-up may be more benign as part of a course correction," said Samantak Das, Chief Economist and Head of Research, India, JLL.
Given the evolving global economic scenario, he said other occupier categories are anticipated to maintain steady state, although with a minor downward bias in the short-term.
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As per the data, the IT/ITeS category still remained the largest driver of overall market activity in January, accounting for 28 per cent of total market activity.
According to the JLL data, India's office Grade A (premium) stock stood at 732 million square feet at the end of March 2022.
The office stocks of other grades were 370 million square feet, taking the total stock to around 1.1 billion square feet.
The report also highlights the impact of the COVID-19 pandemic on the office market in India. It states that the pandemic has led to a shift in occupier preferences, with a greater emphasis on health and wellness features in office spaces. The report suggests that office spaces that offer good air quality, sufficient natural light, and contactless systems are likely to attract more occupiers in the future.
(With PTI Inputs)
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