Bengaluru and Mumbai Lead the Charge in Green-Certified Building Leasing
Bengaluru and Mumbai drive leasing of green-certified buildings, account for over 50% share in Q2 2024.
Green BuildingsLeasingBengaluruMumbaiColliersCredaiSebiReal Estate MumbaiAug 13, 2024
The 13 million sq ft of green office space take-up represents a 24% year-on-year (YoY) increase and accounts for an 82% share in overall leasing during the quarter. The top six cities include Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai, and Pune.
Of the 13 million sq ft of leases signed in green buildings, about 60% were in relatively newer developments that have come up in the last five years. This rapid growth is an indication of the rising awareness amongst corporate occupiers with respect to the role that built structures have to play in containing issues related to climate change through reducing carbon footprint.
Currently, LEED, GRIHA, and WELL are some of the prominent green certifications available in the Indian market, which validate buildings as ‘green’ by assessing various parameters, including energy consumption, waste generation, and alignment of design with health and wellness aspects.
Technology, engineering, and manufacturing companies are at the forefront of leasing green-certified buildings, with about 80% of leasing by these firms since 2023 being in such buildings. Moreover, 62% of flex players prefer space take-up in green-certified buildings.
Overall, at an India level, the technology sector accounted for about 27% share in the cumulative space take-up in green-certified buildings since 2023, followed by occupiers from engineering, manufacturing, and BFSI sectors with about 19% share each.
According to Arpit Mehrotra, Managing Director, Office Services, India, Colliers, “With 13 million sq ft of leasing in green-certified buildings in Q2 2024, a significant 82% of occupiers were inclined towards green-certified buildings. This also reflects occupiers’ strong commitment to align their sustainability goals with the broader sustainability targets of the country.”
Since 2023, about 70-80% of the space uptake by engineering and manufacturing, technology, and BFSI players has been in green-certified buildings. The trend is expected to further accelerate in the next few years.
Moreover, SEBI’s mandatory sustainability reporting further provides a thrust to occupiers, investors, and developers to increasingly consider green portfolios while meeting their ESG targets.
As of June 2024, about 67% of the Grade A office buildings across the top six cities were green certified. Bengaluru and Delhi NCR account for about half of the new green office stock.
Of the 13.2 million sq ft of new Grade A office completions in Q2 2024, almost 70% are green-certified. In the next two-three years, over 150 million sq ft of Grade A office developments in various stages of construction across the six major cities are likely to be green certified, expanding Grade A green stock to over 600 million sq ft.
According to Vimal Nadar, Senior Director and Head of Research, Colliers India, “With increased inclination amongst occupiers for green-certified buildings, several Grade A developers are increasing sustainable offerings in their commercial portfolios. During the second quarter of 2024, almost 70% of the new supply was green-certified. With growing demand, developers are also retrofitting aging office stock and incorporating sustainable elements in overall building design and construction. About 300-350 million sq ft of commercial building stock older than 10 years hold the potential to get refurbished in the next few years and add to the green-certified office stock of the country.”
Colliers is a leading professional services and investment management company, providing services in real estate, investment management, and more. The company has a global presence and provides services to various clients, including investors, developers, and occupiers.
CREDAI is the Confederation of Real Estate Developers Associations of India, which aims to promote and develop the real estate industry in India. The organization has pledged to create 1,000 green buildings by 2025.
SEBI is the Securities and Exchange Board of India, which is the regulator of the securities market in India. The organization has made sustainability reporting mandatory for listed companies, which has provided a thrust to occupiers, investors, and developers to increasingly consider green portfolios while meeting their ESG targets.
Frequently Asked Questions
What is the total office space leased in green-certified buildings in the top six cities in Q2 2024?
13 million sq ft
Which cities account for more than 50% of the total office space leased in green-certified buildings in Q2 2024?
Bengaluru and Mumbai
What is the percentage of leasing by technology, engineering, and manufacturing companies in green-certified buildings since 2023?
About 80%
What is the expected trend in the leasing of green-certified buildings in the next few years?
The trend is expected to further accelerate in the next few years.
What is the percentage of Grade A office buildings that are green certified across the top six cities as of June 2024?
About 67%
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