India's commercial real estate sector has witnessed a remarkable transformation in recent years, with a substantial increase in premium office space inventory. According to a comprehensive report by JLL, a leading real estate advisory firm, the country's Grade A office stock expanded by an impressive 164.3 million square feet between 2021 and the first quarter of 2024. This surge in high-quality office space reflects the growing demand for modern, sustainable workplaces across India's major metropolitan areas.
The report highlights the emergence of several Indian cities as prominent hubs for technology companies and Global Capability Centers. Bengaluru, Chennai, Hyderabad, and Pune have become particularly attractive destinations, collectively accounting for approximately 84% of all GCC leasing activity since 2021. This concentration of tech-driven businesses in these cities has significantly influenced the nature and quality of office spaces being developed and occupied.
During the period from 2021 to Q1 2024, India's top seven markets, Bengaluru, Chennai, Delhi NCR, Hyderabad, Mumbai, Pune, and Kolkata, experienced a cumulative net absorption of around 113 million square feet. Of this, a substantial 94.3 million square feet were in newly constructed buildings completed since 2021. This trend underscores the strong preference among occupiers for modern, state-of-the-art office spaces that offer improved asset quality and higher sustainability ratings.
The shift towards sustainable real estate has been particularly noteworthy in recent years. Samantak Das, Chief Economist and Head of Research and REIS at JLL India, pointed out that 71% of the 164.3 million square feet completed since 2021 was green-certified upon project delivery. This focus on sustainability has led to a significant increase in the proportion of green-certified office stock within the overall Grade A inventory, rising from 39% in 2021 to 56% in March 2024.
The preference for green-rated buildings extends beyond newly constructed properties. Even among buildings completed between 2017 and 2020, green-certified spaces accounted for 70% of net absorption within this age group. This trend indicates a broader shift in the market towards environmentally responsible and energy-efficient office spaces across different age categories of buildings.
However, it's important to note that while green certification is a crucial factor in occupier decision-making, it is not the sole determinant. Rahul Arora, Head of Office Leasing & Retail Services at JLL India, emphasized that building quality, finishes, and amenities are equally relevant in attracting and retaining tenants. The report observed instances of occupier exits from older green-rated buildings between 2021 and March 2024, suggesting that a holistic approach to office space quality is necessary to meet the evolving needs of modern businesses.
The report also highlights a clear preference for modern assets among global occupiers. Approximately 70 million square feet of net absorption occurred in projects completed since 2021, indicating that companies are prioritizing newer buildings as part of their real estate strategies. These modern office spaces offer a mix of amenities and features that are essential for creating comprehensive workplace environments, particularly as firms increase office occupancies in the post-pandemic era.
