News release

India’s office market activity up 23.2% Y-o-Y; Sustains quarterly run rate of 2022

Delhi NCR, Bengaluru, and Pune topped the list as the largest markets in both net absorption and flex end-user deals.

March 29, 2023

Anil Grover

Head - Marketing, India

The gross leasing activity across the top seven cities in India was recorded at 12.8 mn sq ft in Q1 2023, indicating an improvement from the quarterly run rate of 2022. Despite the emerging headwinds, the gross leasing activity stood higher on a year-on-year basis by 23.2%. However, the figure was marginally down by 8.7% on a quarter-on-quarter basis.

Delhi NCR emerged as the biggest gross leasing activity center in the first quarter, with Bengaluru following closely. Both cities accounted for a significant share of 31.2% and 24.3%, respectively. Mumbai and Pune secured the next spots, with 11.7% and 11.0% share of the quarterly gross leasing activity.  

Gross Leasing (mn sq ft) Q1 2022 Q4 2022 Q1 2023 Q-O-Q Growth (%) Y-O-Y Growth (%)
Bengaluru 1.60 2.75 3.12 13.2% 94.8%
Chennai 1.42 1.42 1.25 -11.7% -11.6%
Delhi NCR 2.86 2.64 3.99 51.4% 39.6%
Hyderabad 0.89 2.21 0.97 -55.9% 9.3%
Kolkata 0.13 0.25 0.56 128.0% 323.6%
Mumbai 1.91 3.30 1.50 -54.6% -21.3%
Pune 1.59 1.46 1.41 -3.2% -11.1%
Pan India 10.39 14.02 12.81 -8.7% 23.2%

Source: Real Estate Intelligence Service (REIS), JLL Research

“This quarter saw the highest leasing activity compared to the same periods in 2021 and 2022. The growth story driven by Global Capability Centers in various sectors, such as BFSI, new tech, engineering R&D, along with segments like flex, healthcare-life sciences, and manufacturing/industrial occupiers, is expected to propel office markets' activity. Despite a slight dip Q-o-Q in overall leasing activity during Q1 2023, it is premature to conclude that office markets are experiencing a sluggish period,” said Rahul Arora, Head - Office Leasing Advisory, India, JLL. 

“As occupiers remain cautious about capex-spend, they are strategically incorporating flex spaces in their real estate portfolios. Flex operators' footprint which is now spread over 50 million sq ft across seven major cities, and escalating demand for managed solutions from occupiers reflect the surge of this occupier segment in the industry,” added Arora.

Tech sector's share of leasing activity has hit a six-quarter low at 22.3% due to slow hiring and global challenges, while BFSI and consulting firms have seen q-o-q growth in their respective market shares. Flex remains strong, contributing 17.8% to gross leasing. Bengaluru, Delhi NCR, and Pune are the top three cities for leasing activity.

“Although there has been a slowdown in the tech industry, we anticipate that the demand for office space will remain stable, reaching similar levels as in 2022, with an estimated range of 36-40 million square feet. However, we will have a clearer picture of the direction of office demand after another quarter, said Dr. Samantak Das, Chief Economist and Head of Research and REIS, India, JLL.

“With the Return to Work gaining momentum, real estate planning will focus on talent mobility, healthy work environments, and the employee value proposition. Flexibility will be a key component of real estate portfolio management. We must also monitor the recent surge in COVID cases, as any disruptions to the Return to Work may delay real estate decision-making,” added Dr Das.

Demand: Net absorption at a six-quarter low

India's net absorption in its top seven cities decreased to a six-quarter low of 7.63 million square feet due to reduced expansion activity, delayed space plans, and a hybrid workplace strategy that is still evolving. Companies were consolidating and relocating to save on real estate costs, while there were fewer pre-commitments in new completions during the quarter. This reflects the challenges faced by the corporate world amid global headwinds and an uncertain business environment.

Delhi NCR remained the top city in terms of net absorption for the second quarter in a row, followed closely by Bengaluru. Pune saw a significant improvement in net absorption, jumping to third place with a 16.8% share, supported by healthy pre-commitments. There was also a big increase in Kolkata's quarterly net absorption, which reached a five-quarter high.

Net Absorption (mn sq ft) Q1 2022 Q4 2022 Q1 2023 Q-O-Q Growth (%) Y-O-Y Growth (%)
Bengaluru 1.67 1.20 1.91 58.3% 14.4%
Chennai 1.21 1.24 0.60 -51.2% -49.9%
Delhi NCR 1.34 1.89 1.96 3.8% 46.8%
Hyderabad 3.42 1.74 0.52 -69.8% 84.6%
Kolkata 0.18 0.20 0.46 127.9% 151.6%
Mumbai 1.44 1.05 0.88 -15.9% -38.9%
Pune 2.30 0.66 1.28 93.1% -44.1%
Pan India 11.55 7.99 7.63 -4.5% -34.0%

Source: Real Estate Intelligence Service (REIS), JLL Research

Supply: Quarterly supply at 9.96 mn sq ft; down by 32.8% q-o-q

In Q1 2023, 9.96 mn sq ft of new completions were recorded, which is a decrease of 32.8% compared to the previous quarter. Bengaluru had the highest new completions with 47.7%, followed by Pune and Delhi NCR with 18.4% and 18.1%. These three cities made up 84% of the new completions. Only 21% of the new supply had already been committed, which reflects the current uncertain and bearish business environment. Chennai had a pre-commitment rate of 100%, while Pune had 53%. Hyderabad and Mumbai had pre-commitment rates of 27% and 24%, respectively, and Delhi-NCR had a precommitment rate of only 11%.

New Completions (mn sq ft) Q1 2022 Q4 2022 Q1 2023 Q-O-Q Growth (%) Y-O-Y Growth (%)
Bengaluru 4.63 3.55 4.75 33.8% 2.8%
Chennai 2.40 1.66 0.70 -57.8% -70.8%
Delhi NCR 1.51 1.84 1.81 -2.0% 19.7%
Hyderabad 4.77 5.42 0.68 -87.6% -85.9%
Kolkata 0.27 0.00 0.04 NA -83.7
Mumbai 1.98 1.47 0.15 -89.8% -92.4%
Pune 4.81 0.88 1.383 107.0% -62.0%
Pan India 20.37 14.83 9.96 -32.8% -51.1%

Source: Real Estate Intelligence Service (REIS), JLL Research

Vacancy Trends

Pan-India vacancy has risen marginally to 16.7%, up mere 10 bps q-o-q with new completions continuing to outpace the net absorption. Vacancy going forward as well is expected to remain sticky within this range of 16-17%. The future supply pipeline remains strong and while leasing momentum is showing a slight deceleration, a more prominent trend is yet to become visible. Moderate to strong pre-commitments in the upcoming projects and expectations of leasing activity to pick up steam by H2 2023 is expected to support the net absorption projection and keep vacancy within range.


Although Q1 2023 has seen a slight decrease in leasing activity, it is too early to conclude that the office market is sluggish. Q1 2023 had the highest leasing activity compared to the same periods in 2021 and 2022. However, space requirements have decreased by 15-20% due to delayed decision-making and global economic headwinds, which may continue to impact space decisions throughout the year. Despite this, India's position as a leader in the global tech ecosystem should enable real estate markets to weather the storm. The growth of offshoring driven by GCCs in various segments is also likely to aid upcoming office market activity. We expect office demand to be close to 2022 levels in the range of 36-40 mn sq ft, though better clarity will emerge by next quarter. Around 53-58 mn sq ft of new supply is expected to come on-stream in the next 12 months, with higher pre-commitment rates of 22-25% in institutionally owned assets (as against 14-17% in total) indicating emphasis on healthy workspaces and ESG considerations.

Note: Net absorption is calculated as the new floor space occupied less floor space vacated. Floor space that is pre-committed is not considered to be absorbed until it is physically occupied. Gross leasing refers to all lease transactions recorded during the period, including confirmed pre-commitments, but does not include term renewals. Deals in the discussion stage are not included.

About JLL

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JLL is India’s premier and largest professional services firm specialising in real estate. The Firm has grown from strength to strength in India for the past two decades. JLL India has an extensive presence across 10 major cities (Mumbai, Delhi NCR, Bengaluru, Pune, Chennai, Hyderabad, Kolkata, Ahmedabad, Kochi, and Coimbatore) and over 130 tier-II and III markets with a cumulative strength of close to 12,000 professionals. The Firm provides investors, developers, local corporates, and multinational companies with a comprehensive range of services. These include leasing, capital markets, research & advisory, transaction management, project development, facility management and property & asset management. These services cover various asset classes such as commercial, industrial, warehouse and logistics, data centres, residential, retail, hospitality, healthcare, senior living, and education. For further information, please visit