India's office leasing in Q1CY25 hits 19.46 mn sq ft, up 28.4%: JLL

The Indian office market recorded a gross leasing of 19.46 million square feet (msf) during the January to March period, up 28.4 per cent year-on-year (Y-o-Y) amid strong demand from domestic occupiers, global capability centres (GCCs), flex, and third-party outsourcing firms, as per JLL, a global commercial real estate and investment management firm.

 

Gross leasing refers to all lease transactions recorded during the period, including confirmed pre-commitments, but not term renewals and deals in the discussion stage.

 

Domestic occupiers, led by flex and third-party technology firms, ramped up their activity by 10.3 per cent Y-o-Y and recorded their strongest-ever performance by leasing 8.82 msf of space in the period. Global occupiers continued to remain the mainstay of leasing activity, nevertheless, driven primarily by GCCs.

   

Flex was the dominant domestic occupier segment in Bengaluru and Pune, accounting for 70 per cent and 61.8 per cent, respectively, in the domestic occupier space take-up. Banking, financial services and insurance (BFSI) was the biggest contributor in Mumbai, while technology was the major contributor in Hyderabad in domestic occupiers’ leasing activity.

 

The flex segment saw the third successive quarter when it leased about 4 msf or more. Flex and third-party technology firms combined to account for a 73.1 per cent share of domestic leasing activity in Q1CY25.

 

“The dominance of global occupiers, particularly GCC set-ups, which comprised 64.1 per cent of international leasing, reflects India's growing appeal as a strategic location for multinational operations. Tight vacancy levels in core markets coupled with steady demand signal a bullish outlook for India's commercial real estate sector,” said Rahul Arora, head – office leasing and retail services, senior managing director (Karnataka, Kerala), India, JLL.

 

Meanwhile, vacancy levels declined to a near four-year low, to 15.7 per cent, down by 50 basis points quarter-on-quarter. Vacancy in key office clusters remains in the tight single digits.

 

City-wise, however, every top Indian city, barring Chennai, showed growth in leasing. Chennai witnessed a 29 per cent Y-o-Y decline in gross leasing.

 

However, while the growth is expected to pivot around GCC activity, domestic occupiers are likely to play a bigger role, especially those from the flex, BFSI and manufacturing segments. Walmart is expected to set up its second GCC in India in Chennai, where it has taken up 465,000 square feet of space in International Tech Park Chennai.

 

Moreover, short-term sluggishness in market activity may be seen as firms evaluate the impact of tariffs on the global economic landscape – both implied and explicit. The uncertainty and the emerging business strategies may also act as a tailwind to more offshoring opportunities for India from global firms.