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Commercial leasing in India grows to record high in Q4

Commercial leasing in India

Commercial leasing in India – Rising demand for office and warehouse space drove commercial leasing to a record high in the October-December period. According to data from commercial real estate services firm Cushman & Wakefield, gross leasing volume (GLV) in India’s commercial leasing market increased 84% year on year in Q4 to 27.4 million sq.ft (msf). This is not only the greatest quarterly GLV ever, but it also outperforms the previous record high volume of Q4, 2019 by 4.5 msf.  

According to a recent research, “the Indian office sector soared to new heights in the fourth quarter of 2023, defying all odds and setting record breaking highs in both gross lease volume (GLV) and net absorption.” Net absorption of commercial spaces increased by 106% year on year during the quarter to 18.6 million square feet. While it increased by 129% consecutively. GLV represents all lease activity in the market, including corporate term renewals, whereas net absorption data displays new spaces occupied over the period, adjusted for exits, if any.  

Total GLV was 74.4 msf in 2023, 4% greater than the previous year’s record high. The net absorption volume for calendar year 2023 was 41 million square feet, which was 2 million square feet less than the largest net absorption volume witnessed in the Indian office sector so far in 2019. “This impressive surge in office demand is primarily driven by new leasing and, in some cases, building completion with strong pre-commitments, resulting in a healthy level of net absorption during Q4-23.” According to Cushman & Wakefield analysts, “the active pipeline of deals currently suggests that this momentum in fresh space leasing is likely to continue over the next couple of quarters.” 

Commercial leasing in India

Bengaluru’s rise has been the most spectacular among major markets, with the city posting three times the office lease volumes as the previous quarter. Furthermore, the city has increased its leasing volume by 21% since its last peak in Q2, 2022, with over 8.3 million square feet leased in Q4, 2023. Karnataka’s capital also accounted for more than 40% of the country’s overall net absorption, with demand for new space driven by the E&M industry (30%), followed by IT and business process management (22%), professional services (13%), and flex space operators (9%). With the rate of employees retiring to the office increasing in sectors such as E&M, Prof. Services, and BFSI.