Delhi NCR has once again emerged as the country’s top region in terms of leasing activity with a gross leasing area reaching 4.03 million square feet in the first quarter of 2024, according to a report.

Among the various submarkets within Delhi NCR, the NH-8 in Gurugram and Noida City showcased the highest leasing activity, collectively accounting for over 50% of the total leasing during the quarter, real estate services firm JLL said in its report.

Delhi NCR, Bengaluru, Chennai top 3 regions in office leasing

Delhi NCR was followed by Bengaluru, which saw gross office leasing at 3.09 million sq ft area in the said quarter. Chennai was on the third position on the list of top seven Indian cities, with 2.67 million sq ft of office leasing.

With 4.03 million sq ft leasing, Delhi NCR has surpassed all previous Q1 performances, marginally increasing from the 3.99 million sq ft recorded in the same period last year, the report said.

“The leasing surge was fuelled by a strong demand from domestic occupiers, who accounted for approximately 54% of the total leasing activity. This uptick in demand was particularly noticeable in the flex, BFSI, and manufacturing sectors, with flex contributing to more than one-third of Delhi NCR’s leasing activity,” according to the JLL report.

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Flexible space leasing logs robust growth

Flex operators, in particular, experienced unparalleled growth during this quarter, with a record-breaking quarterly space take-up of 1.42 million sq ft. This surge indicates the rising popularity and demand for flexible workspaces in the region.

NH-8 in Gurugram and Noida showcased the highest leasing activity, collectively accounting for over 50% of the total leasing during the quarter, the report said. “These areas have become prime destinations for businesses and have attracted significant attention from occupiers.

“The impressive leasing performance in Delhi NCR’s first quarter highlights the region’s resilience, vibrancy, and attractiveness as a commercial real estate market. As the year progresses, the industry will closely monitor its continued growth and the evolving preferences of occupiers,” said Manish Aggarwal, Senior Managing Director, North & East India, JLL.

Impressive growth achieved in pan India leasing

At an overall level as well, gross leasing activity reached an impressive 15.16 million sq ft in Q1 2024, an increase of 13.8% compared to the same period last year.

This marks the third consecutive quarter where gross leasing has surpassed the 15 million sq ft mark, following the historical high of 20.94 million sq ft in Q4 2023 and 16.03 million sq ft in Q3 2023.

“Notably, this also represents the second-highest gross leasing ever recorded in the first quarter of any year, only trailing the levels of 17.3 million sq ft witnessed in Q1 2020. The quarter has set the platform for India’s office market to reach and even surpass the peak activity levels witnessed in 2023,” the report said.

Domestic occupiers march ahead

In the first quarter of 2024 belonged to the domestic occupiers, particularly in the BFSI, Flex, and manufacturing/engineering segments as they gained a majority share in office leasing.

Flex rise as tech continues to remain sluggish

Flex and manufacturing/engineering sectors maintain a strong bullish outlook on their growth trajectory, while the tech industry continues to grapple with the challenge of sluggishness. Space take-up by third-party outsourcing firms, given global headwinds and slower revenue growth continues to impact the tech sector, with its share of gross leasing at 24.2%, mostly range-bound compared to the previous year.

“Flex space operators continue to play a significant role in India’s office markets, accounting for 21.0% of the gross leasing in Q1 2024, the highest space take up ever for this segment post Covid,” according to JLL.

The manufacturing/engineering sector is witnessing a sustained strengthening in demand, with the sector’s share rising to 20.2%, the highest in nearly three years, as India’s GCC ecosystem continues to become more broad-based with high-end R&D work coming into the country and creating expansion-driven space demand.