Net demand for office space grew 10 per cent on an average this year to nearly 42 million square feet across seven major cities despite global economic uncertainties, driven by record leasing activities in the fourth quarter by corporates, according to JLL India.

Real estate consultant JLL India on Friday released data for the office market, showing that the net leasing of office space stood at 41.97 million square feet this year as against 38 million square feet in the previous year. This is the second highest annual net office space absorption. The highest leasing was recorded in 2019.

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.

While net absorption in the first half of the year was subdued, the pace of expansion from corporates quickened in the latter half of the year, reaching unprecedented heights in the final quarter, JLL noted.

"This growth was fuelled by India's talent and cost arbitrage, along with its growing reputation as an innovation and R&D (research and development) hub. The capacity addition in terms of both office space and headcount further validates the confidence in India's business environment," the consultant said.

Net absorption of office space reached a historic high of 16.01 million square feet during the October-December period this year, beating the previous high of 14.09 million square feet in the fourth quarter of 2019.

As per the latest data, the net office leasing in Chennai jumped more than two times to 6.61 million square feet during 2023 calendar year from 3.26 million square feet in the last year. In Kolkata, the demand grew 99 per cent to 1.35 million square feet from 0.68 million square feet.

Bengaluru, the prominent office market, saw a slight fall in demand to 9.01 million square feet from 9.05 million square feet. The demand declined 23 per cent in Hyderabad to 6.89 million square feet from 8.96 million square feet.

Net office space demand in Delhi-NCR rose 18 per cent to 7.25 million square feet from 6.16 million square feet.

Mumbai witnessed a 6 per cent growth in demand to 6 million square feet from 5.65 million square feet, while Pune saw a 15 per cent rise in leasing to 4.87 million square feet during this year from 4.24 million square feet in the 2022 calendar year.

JLL India said that gross leasing of office space in these seven markets stood at 62.98 million square feet, a significant 26.4 per cent year-on-year increase.

Gross leasing refers to all lease transactions recorded during the period, including confirmed pre-commitments, but does not include term renewals.