Commercial leasing activity is still brisk in January.

Leasing activity in office space remained robust in January. However, a seasonality blip due to the global holiday season falling during the month led to some decline compared with December 2022, a report by JLL India said on Monday. The report further said the space take-up may remain sluggish in the upcoming months with headwinds faced in the technology sector.

The total monthly leasing activity for January stood at 3.2 million square feet with the typical January lull after the 2022 year-end leasing momentum causing a 56.4% month-on-month decline. However, it was still higher by 93.1% year-on-year. Fresh leasing, which included expansion and relocation-driven space take-up, accounted for 87% of all recorded transactions during the month. January is typically a low period as the holiday season for global corporates and future business planning take precedence.

Mostly deals that slipped due to certain reasons get concluded during this month, according to JLL India. In January, the three cities that saw the maximum leasing activity were Delhi-NCR, Chennai and Mumbai, accounting for 77% of such activity. In terms of number of transactions, Mumbai remained the most active market, followed by Delhi-NCR.

 “As future business projections are made under the shadow of global headwinds and the tech sector, facing a period of course correction is likely to be slow in space take-up, we expect that rising office occupancies and growth in other occupier segments should keep the momentum steady,” said Samantak Das, chief economist and head of research and REIS, India, JLL. However, over the next two to three months, while the overall sluggishness is likely, there is an expectation of sustained trends of demand movement, he added.

The IT sector is currently facing slower employment and sluggish corporate growth expectations, and as a result, space take-up may be more benign as part of a course correction, the report by JLL India said. “Given the evolving global economic scenario, other occupier categories are anticipated to maintain steady state, although with a minor downward bias in the short-term.

The IT/ITeS category still remained the largest driver of overall market activity in January, accounting for 28% of total market activity, thanks to one large transaction and a few smaller ones. Whilst the actual numbers were identical m-o-m, BFSI and manufacturing made considerable advances in terms of share,” it added.