Office Market Update: Q3 2023

Gross leasing in Q3 2023 surpasses the average quarterly leasing seen during 2019 peak numbers

November 16, 2023
  • Samantak Das
  • Rohan Sharma
  • Shweta Kakkar

Gross leasing activity in Q3 2023 across the top seven cities rose to 16.03 mn sq ft, up by a significant 26.4% q-o-q, driven by strong occupier traction in the tech cities of Bengaluru and Hyderabad again. Gross leasing in Q3 also surpassed the average quarterly leasing witnessed in the historic pre-pandemic year of 2019. YTD gross leasing at 41.34 mn sq ft is now the highest among all similar periods post-2019. The office markets’ performance is a testament to the strong fundamentals of demand and the complete absence of any lasting effects of the global headwinds, except delayed decision-making.

India’s net absorption recorded its strongest quarter in an 18-month period and rose to 10.37 mn sq ft in Q3. Strong expansion-driven demand and occupier activity in recent completions, supported this trend. While relocation/consolidation activity is still a dominant theme, prior pre-commitments were honored, and new space acquisition remained healthy. Technology firms remained slightly restrained but strong growth from other segments drove the net absorption to its recorded levels. YTD net absorption at 25.96 mn sq ft is 68% of 2022 full year numbers.

Space requirements continue to exhibit stability with new space demand replacing deal closures as recovery remains on track. The absence of any lasting impact of global headwinds on demand despite tech sluggishness is evidence of the resilience in India’s office markets. With the full year 2023 estimates likely to be close to 2022 levels, the demand remains positively oriented toward growth and future headcount addition.

Key trends:
  • Bengaluru, Delhi NCR and Hyderabad lead net absorption in YTD 2023 with a combined 59% share: Bengaluru continued to be the biggest contributor to net absorption with a 23.7% share in YTD 2023 numbers, followed by Delhi NCR which accounted for a 19.3% share. Hyderabad was in third with a 15.8% share. On a YTD basis, net absorption was higher in Chennai, Delhi NCR and Kolkata. At a Pan-India level, YTD net absorption in 2023 is slightly lower by 13.9% compared to Jan-Sep 2022, with forecasts for the full year remaining intact at the 36-39 mn sq ft range.

  • Quarterly supply at 14.44 mn sq ft; up by 37.7% q-o-q: New completions were recorded at 14.44 mn sq ft in Q3 2023, a 37.7% q-o-q increase and the highest in a year. In line with gross leasing trends, Bengaluru and Hyderabad dominated new completions with respective shares of 37.3% and 24.3%. With Chennai accounting for a 10.0% share, the three tech gateway cities continued to lead with a combined share of 71.6% in Q3 completions. In the quarterly supply infusion, the average precommitment rate was at 20%.

  • Vacancy up by 20 bps q-o-q: With new completions surpassing net absorption, the Pan-India vacancy has increased marginally by 20 bps q-o-q to 16.8%. However, vacancy rates in core office markets across all cities are currently in single digits. Net absorption numbers are expected to remain strong and keep vacancy range-bound and sticky within the 16-18% range.

  • Secular occupier share among the top-contributing industry segments with manufacturing taking the top spot in Q3: The impact of favourable manufacturing policies and India’s engineering talent continues to gather momentum as the occupier segment rose to become the biggest contributor to Q3 leasing activity with an 18.6% share. This follows from the last quarter when this segment’s share rose to an eight-quarter high. Flex continues to occupy the second spot but accounted for a greater share at 18.4%. The BFSI sector followed with a 17.1% share in quarterly leasing activity.

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.