Office leasing dips 13% MoM to 5.8 mn sq ft in Nov, up 60% YoY: JLL study

Experts cite global headwinds for the month-on-month dip

Office leasing activity for the month of November stood at 5.8 million sq ft, down 13.4 per cent month on month (MoM), a JLL report said. However, on a year-on-year (YoY) basis, it was up 59.5 per cent. Fresh leasing with expansion and relocation transactions dominated the bulk of occupier activity during the month.

Total leasing activity for the 6-month period June to November was up 25.2 per cent over the same period in 2021, the report said.

Bengaluru, Mumbai, and Chennai were the top three cities, with nearly 77 per cent of overall monthly leasing activity in November. Mumbai continued to account for the maximum number of deals, followed by Chennai.

"As we approach the end of the year, monthly aggregate leasing activity declined month on month in November 2022, as occupiers have turned slightly cautious in the current environment. Global headwinds are creating an environment of uncertainty for business growth projections which is impacting real estate decision-making," said Samantak Das, Chief Economist and Head of Research and REIS, India, JLL.

"We expect that slower tech hiring activity and direction from global HQs may cause a temporary disruption for one to two quarters till the headwinds ease off even as India’s position as the back office and R&D hub for the world is likely to remain intact," he added.

According to the report, the IT/ITeS segment reclaimed its place as the biggest driver of aggregate market activity in November 2022, with a 23 per cent share.

Both Consultancies and BFSIs showed a slight decline in their respective shares, month on month. Flex remained a key occupier segment and saw its share rise to 12 per cent.

The manufacturing/Industrial segment also remained robust, although its share declined on an M-o-M basis, the report finds.

It also said that global headwinds are slowing down occupier market activity amid delayed decision-making as occupiers keep an eye on the evolving macroeconomic environment and its resultant impact on business growth.

While overall market activity remains much better in 2022 than in the previous two Covid-hit years, slower tech hiring and direction from global HQs on business projections may keep occupiers more cautious in the short-term.