The total leasing of office space, which comprises demand for all grades of buildings, fell 21 per cent year-on-year in October across seven major cities to 6.7 million square feet on lower demand, according to property consultant JLL India.
The aggregate office market leasing activities refer to transactions for all grades or types of buildings in the top 7 cities (Delhi-NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Pune and Kolkata). The data includes confirmed pre-commitments and term renewals. Deals in the discussion stage are not included.
Total office leasing activities stood at 8.5 million square feet in August 2021.
As per the data, Mumbai with a 65 per cent share of monthly leasing activity clearly leads the way, mainly due to strong demand for space coupled with select significant renewals during the month, followed by Delhi NCR and Pune.
These three cities accounted for nearly 93 per cent of all leasing activity in the October 2022 monthly leasing activity tracker.
The manufacturing sector takes the lead as the biggest driver of aggregate market activity in October 2022 with a 22 per cent share. Consultancy business has also seen improved leasing activity during October with an 18 per cent share and the BFSI segment has a similar share
Technology firms are moving slowly on their space requirements and that is visible in the share being just 15 per cent in October, declining to a six-month low, JLL said.
“Prevailing sentiment is creating headwinds for office space decision-making and while activity remains largely intact, lower pre-commitment activity in the last two months is indicative of a momentary sluggishness, also evidenced by the tech sector which is driven mostly by US firms,” the consultant said.
Similar trends may prevail for some time before greater clarity on business and macroeconomic environment will enable occupiers to approach real estate plans with greater certainty moving forward, it added.
According to the JLL data, India’s office Grade A (premium) stock stood at 732 million square feet at the end of the March quarter. The office stocks of other grades were 370 million square feet, taking the total stock to around 1.1 billion square feet.
The consultant releases the leasing data of Grade A office space on a quarterly basis, while it has started to compile the total leasing transactions of all grades of buildings on a monthly basis.