India’s office market ruled by contemporary buildings: JLL

Between the years 2021 and Q1 2024, 164.3 million sq ft of new buildings were added to India’s Grade A office stock, according to JLL. During the same period, JLL noted that the top seven markets in India which include Bengaluru, Chennai, Delhi NCR, Hyderabad, Mumbai, Pune and Kolkata, witnessed a cumulative net absorption of ~113 million sq ft out of which a massive 94.3 million sq ft were in new-age buildings (buildings completed since 2021). The improved asset quality and sustainability ratings have been positively impacting space take-up across India’s office markets.

The South Indian cities, Bengaluru, Hyderabad, Chennai, as well as Pune are the tech and GCC hubs of the country, accounting for ~84% of all GCC leasing activity since 2021. The preference for modern assets is even more pronounced here as we have witnessed vacating of close to ~4.5 million sq. ft of space in buildings completed prior to 2016, considered as old assets.

On the other hand, there has been a total net absorption of ~70 million sq. ft in projects completed since 2021, clearly outlining how more modern assets are being preferred by global occupiers as a part of their real estate strategy. This is evident given that such assets provide the right mix of amenities and drivers to create a holistic workplace environment for employees as firms look to ramp up office occupancies.

“The great push towards sustainable real estate has been quite evident in the past 3-4 years, driven in large part by the active occupiers in the country. This is visible in the fact that of the 164.3 million sq. ft completed since 2021, 71% was green certified upon project delivery. Resultantly, India has seen its share of green-certified office stock in overall Grade A stock rise substantially from just 39% in 2021 to 56% in March 2024. What is more interesting is that, of the 94.3 million sq. ft net absorption recorded in buildings completed since 2021, 3/4th was recorded in such green-rated projects,” said Dr Samantak Das, chief economist and head of research and REIS, India, JLL.

The preference becomes even more evident given that green-rated buildings with completion dates of 2017-2020 also accounted for a 70% share of net absorption seen in buildings within this age group.

“Green ratings are not the only factor in occupier decision-making. Building quality and finishes, amenities etc. are equally relevant. Older buildings despite being green-rated have shown occupier exits between 2021-March 2024 signaling that while being a critical factor, green ratings may not be the single determining factor. Building upgrades and futureproofing are key drivers to keep a building relevant for occupiers, which include factors around sustainability as well as overall project upkeep and amenities upgradation,” said Rahul Arora, head – office leasing & retail services, India and senior MD – Karnataka, Kerala, JLL.