The green office leasing sector in India has witnessed significant growth and adoption in recent years, with a notable increase in the share of green office leases and the emergence of key market leaders in sustainable practices.
Increase in Green Office Leasing
- Share of Green Office Leasing: The share of green office leasing in India has surged to 16% in the 2022-2023 period, marking a significant increase from the pre-COVID years.
- Growth Predictions: The JLL – CRE Matrix report anticipates that the share of green office leasing is expected to reach 20% within the next year, highlighting the growing momentum towards sustainable leasing practices.
Market Leaders and Location Trends
- Global Capability Centers (GCC): Global Capability Centers and institutional landlords have been at the forefront of driving sustainable practices, accounting for 76% of overall leases.
- Leading Markets: Hyderabad and Bengaluru have emerged as the leading markets for green office leasing, constituting 64% of the total green lease market in India.
Analysis of Leases
- The data revealed a substantial increase in leased area, with a 132% rise from 3.7 million square feet to 8.6 million square feet during the 2022-2023 period compared to the pre-COVID years.
Driving Factors and Challenges
- Sustainable Practices: The joint efforts of asset owners and occupiers have been instrumental in promoting responsible leasing practices in the industry.
- Challenges: The lack of industry-wide guidance, transparency, legal complexities, and split incentives have been identified as barriers to the widespread adoption of green leasing practices.
Key Aspects of Green Leasing
- Focus Areas: Green leasing clauses primarily focus on waste management, energy efficiency, and data sharing, with a strong emphasis on reducing carbon footprint and promoting sustainable practices.
- Energy Efficiency: Multiple clauses are centered around energy efficiency as an important instrument for reducing a building’s carbon footprint.
Expert Insights
- Samantak Das: Samantak Das, Chief Economist and Head of Research and REIS, India, JLL, highlighted the incorporation of sustainability into the boardroom agenda and the significant progress towards sustainability in the Indian market.
- Abhishek Kiran Gupta: Abhishek Kiran Gupta, CEO and Co-founder of CRE Matrix, emphasized the potential for green leasing to reach around 20% penetration within the next 1-2 years, with anticipated benefits for both landlords and occupiers.
Future Outlook and Mission
- Environmental Sustainability: The realty sector is expected to play a key role in achieving environmental sustainability goals, with a shift towards green leasing being a crucial focus for the next two decades.
- Emission Reduction Targets: India aims to reduce GDP emissions by 45% by 2030 and achieve net zero emissions by 2070, with the realty sector expected to contribute significantly to this mission.
The surge in green office leasing in India reflects a growing commitment to sustainable practices within the real estate sector. While challenges exist, the collaborative efforts of stakeholders and the potential for significant rental arbitrage demonstrate the promising trajectory of green leasing in the country.
As the industry continues to evolve, the adoption of green leasing practices is expected to play a pivotal role in driving environmental sustainability and operational efficiency within the commercial real estate market.
Download the full Report – Green Leasing Office Report