Office Leasing Surges by 54% in Q1 2023: JLL India Report
Net absorption of office space in top Indian cities witnessed a significant 54% increase in the first quarter of 2023, according to a report by real estate consultancy JLL India. This surge highlights the robust recovery of the commercial real estate market.
Office LeasingCommercial Real EstateJll IndiaNet AbsorptionOffice SpaceReal Estate PuneApr 21, 2025
The report, which covers the seven top cities—Mumbai, Bengaluru, National Capital Region (NCR), Pune, Hyderabad, Chennai, and Kolkata—reveals that the net absorption of office space reached 12.3 million square feet (msf) in Q1 2023, up from 8 msf in Q1 2022. Net absorption refers to the actual space physically occupied minus vacated space, providing a clear picture of the market's health.
Bengaluru led the charge with a significant share of the total net absorption, accounting for 43% of the total space leased in the quarter. This is followed by Mumbai, which saw a robust 20% of the total leasing activity. The resurgence in demand can be attributed to several factors, including the return of employees to physical offices, the growth of technology and IT sectors, and the availability of high-quality office spaces at competitive prices.
“The return of employees to office spaces, coupled with the continued growth of the technology and IT sectors, has been a key driver of the surge in office leasing,” said Ramesh Nair, CEO and Country Head of JLL India. “We are witnessing a renewed confidence in the commercial real estate market, with companies expanding their footprint and investing in premium office spaces.”
The report also highlights the importance of Grade A office spaces, which are preferred by companies due to their superior quality, sustainability features, and proximity to key business districts. The demand for sustainable office spaces is on the rise, with many companies prioritizing environmentally friendly buildings that offer better work environments and lower operational costs.
In terms of sectors driving the demand, the technology and IT sectors remain the primary contributors, followed by the financial services, pharmaceuticals, and manufacturing industries. The healthcare sector has also shown a notable increase in office space leasing, reflecting the growing importance of healthcare infrastructure in the wake of the pandemic.
Despite the positive trends, the market continues to face challenges such as high construction costs, delays in project completions, and the ongoing impact of remote and hybrid work models. However, the overall sentiment remains optimistic, with experts predicting a steady growth in the office leasing market in the coming quarters.
“The commercial real estate market is well on its way to a full recovery, with strong fundamentals and a positive outlook,” added Nair. “We expect the trend to continue in the second quarter, with further improvements in leasing activity and occupancy rates.”
For companies looking to expand or relocate, the current market conditions offer a favorable environment with a range of options and competitive pricing. However, it is crucial to conduct thorough market research and engage with experienced real estate consultants to make informed decisions that align with their business goals and long-term strategies.
In conclusion, the 54% increase in office leasing in Q1 2023 is a clear indication of the commercial real estate market's resilience and potential for growth. As the economy continues to recover and businesses adapt to the new normal, the demand for high-quality office spaces is expected to remain strong, driven by the need for collaborative work environments and the continued expansion of key industries.
Frequently Asked Questions
What does net absorption of office space mean?
Net absorption of office space refers to the total amount of space physically occupied minus the amount of space vacated. It is a key metric used to gauge the health of the commercial real estate market.
Which city led the office leasing activity in Q1 2023?
Bengaluru led the office leasing activity in Q1 2023, accounting for 43% of the total net absorption of office space.
What sectors are driving the demand for office space?
The technology and IT sectors are the primary drivers of demand for office space, followed by financial services, pharmaceuticals, and manufacturing industries.
What are the key factors behind the surge in office leasing?
The key factors behind the surge in office leasing include the return of employees to physical offices, the growth of the technology and IT sectors, and the availability of high-quality office spaces at competitive prices.
What challenges does the commercial real estate market face?
The commercial real estate market faces challenges such as high construction costs, delays in project completions, and the ongoing impact of remote and hybrid work models.
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