Office Market Update: Q1 2023

Office markets display resilience; Q1 2023 leasing is higher than in corresponding periods of the last 2 years

May 19, 2023
  • Samantak Das
  • Rohan Sharma
  • Shweta Kakkar

India’s gross leasing activity across the top seven cities was recorded at 12.8 mn sq ft, better than the quarterly run rate of 2022. It was higher by 23.3% y-o-y and in fact the highest in terms of leasing activity among the same periods in 2021 and 2022. A marginal deceleration was visible though with an 8.6% q-o-q drop, but the talked-of headwinds’ impact is yet to manifest itself.

India’s net absorption across its top seven cities slipped to its lowest in six quarters to 7.63 mn sq ft. A combination of slower expansion activity, deferred space plans & space contraction with a hybrid workplace strategy still evolving were key reasons. Also, leasing activity being characterized by consolidation/ relocation to save on real estate costs and lower pre-commitment rates in new completions contributed to lower net absorption numbers in the quarter.

Return to Work trends have picked up momentum across all industries and office occupancies are rising, giving occupiers the confidence to plan RE strategies in a more certain environment. India’s established and momentum-driven credentials as a tech and R&D innovation hub are positively impacting job creation and supporting the growth in its office markets. While we have seen a cooling off in overall space requirements, with about 35-40% of active enquiries being deferred given the global uncertainties, the overall expansion plans remain intact as India remains a key part of global firms’ push for talent and business growth.

Key trends in office segment in Q1 2023
Net absorption shows mild deceleration q-o-q

The quarterly net absorption in Q1 2023 was down by 4.5% q-o-q at 7.63 mn sq ft, as signs of sluggishness and deferments in expansion driven requirements and the hybrid work mode, causing some space contractions, were visible. Net absorption also fell to a six-quarter low. Delhi NCR retained its top spot for the second quarter in a row with a 25.7% share, with Bengaluru a close second with a 25.0% share.

Pune jumped to the third spot with a 16.8% share in the quarterly net absorption, supported by healthy pre-commitments in new completions. These three cities also saw net absorption improve q-o-q as well for them. Kolkata also saw a big jump with its quarterly net absorption jumping to a five-quarter high.

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

New completions were recorded at 9.96 mn sq ft in Q1 2023, down by 32.8% q-o-q. Bengaluru dominated the new completions in Q1 2023 with a share of 47.7% followed by Pune and Delhi NCR with 18.4% and 18.1% shares, respectively. These three cities accounted for nearly 84% of quarterly new completions. Just around 21% of the new supply infusion was pre-committed, highlighting the current bearishness impacting and delaying occupier decision-making.

Tech remains the leading occupier category in terms of leasing activity

While tech remains the biggest occupier category by activity, its shine has slightly dulled with the global headwinds around tech and sluggish hiring causing an impact on the pace of decision-making. The tech segment’s share slipped to its lowest post-pandemic to a six-quarter low at 22.3% of the quarterly leasing activity. On a q-o-q basis, BFSI and Consulting firms were big movers seeing a significant jump in their market shares to 17.5% and 14.0%, respectively in the Q1 2023 gross leasing activity.

Flex firmly on the growth curve

Flex continues to see positive momentum with a market share of 17.8%, making it the second biggest contributor to gross leasing during the quarter. Flex has now been the second biggest contributor to the quarterly gross leasing activity for four quarters in the last five, signalling the strong growth currently underway, driven largely by managed space operators.

Fill out this form to download report

There was an error submitting the form. Please try again.


Jones Lang LaSalle (JLL), together with its subsidiaries and affiliates, is a leading global provider of real estate and investment management services. We take our responsibility to protect the personal information provided to us seriously.

Generally the personal information we collect from you are for the purposes of downloading materials you have requested.

We endeavor to keep your personal information secure with appropriate level of security and keep for as long as we need it for legitimate business or legal reasons. We will then delete it safely and securely. For more information about how JLL processes your personal data, please view our privacy statement.