Office Space Leasing Rose To An All-Time High In 2019: JLL Report

Net office space leasing rose by 40 percent this year across seven major cities to an all-time high of 46.5 million square feet, mainly driven by higher demand from IT firms and co-working operators, according to property consultant Jones Lang Lasalle India.

Office space absorption stood at 33.2 million sq. ft in 2018 across seven major cities—Delhi-National Capital Region, Mumbai, Bengaluru, Chennai, Hyderabad, Pune and Kolkata.

"India office market has set a new benchmark and recorded a historic high, both in net absorption and new completions. While 46.5 mn sq ft of space got absorbed, nearly 52-mn sq ft of Grade A office space was completed in 2019," JLL said in a statement.

New supply also rose 45 percent to 51.6 million sq. ft from 35.7 million sq. ft, while vacancy reduced to 13 percent.

The strong expansion of IT/ITeS (42 percent of overall leasing) and co-working operators (14 percent of overall leasing) in cities with strong fundamentals and planned infrastructure improvements has led the strong growth in demand so far, the report said.

Bengaluru, Delhi-NCR and Hyderabad accounted for nearly 70 percent of the net absorption in 2019.

Mumbai witnessed a marginal drop of 2 percent year-on-year in net absorption on the back of limited relevant supply despite strong latent demand from large occupiers. Hyderabad recorded net absorption of 10.5 million sq ft in 2019.

With the net absorption of more than 5 million sq ft in the last quarter (October-December), the Delhi-NCR market too achieved a new yardstick of around 11 million sq ft in 2019.

Investment sentiments in office space have remained strong in the country leading to a general drop in vacancy levels from the previous year.