The demand for green-certified office spaces in India has reached unprecedented levels, with nearly 75% of office space leasing in the first half of 2024 being in buildings with green certifications. This trend underscores a growing commitment among occupiers towards sustainability and reducing their carbon footprint.
In Q2 2024 alone, approximately 13 million square feet of office space was leased in green-certified buildings across the top six cities, marking a significant 24% year-over-year increase and an impressive 82% share of total leasing activity for the quarter. Bengaluru and Mumbai emerged as leaders in this trend, together accounting for over 50% of the green-certified leases in the quarter. Notably, about 60% of these leases were in relatively new developments constructed in the past five years.
Growing Green Certification Among Occupiers
The shift towards green office spaces is driven by an increasing awareness among corporate occupiers of the role that sustainable buildings play in addressing climate change. Prominent green certifications such as LEED, GRIHA, and WELL are becoming more sought after as they offer benefits like lower operational costs, improved indoor air quality, and enhanced employee productivity.
“Over the last few quarters, developers, investors, and occupiers in the office market have increasingly embraced the adoption of sustainable elements in their portfolios. With 13 million square feet of leasing in green-certified buildings in Q2 2024, a significant 82% of occupiers were inclined towards green-certified buildings. This reflects occupiers’ strong commitment to align their sustainability goals with the broader sustainability targets of the country,” said Arpit Mehrotra, Managing Director, Office Services, India at Colliers.
Sector-Specific Trends
Technology and Engineering & Manufacturing firms are at the forefront of this green shift, with about 80% of their leasing activity in green-certified buildings since 2023. Additionally, 62% of flexible workspace providers also prefer green-certified locations. The technology sector alone accounted for 27% of the green-certified leasing, followed closely by Engineering & Manufacturing and BFSI sectors.
City-wise data highlights:
- Bengaluru: 68% of leasing in green-certified buildings, with Engineering & Manufacturing leading.
- Chennai: 79% of leasing in green-certified buildings, predominantly by the Technology sector.
- Delhi NCR: 74% share, with Technology firms driving the trend.
- Hyderabad: 76% share, largely due to Technology firms.
- Mumbai: 72% share, with BFSI sector leading.
- Pune: 71% share, with BFSI sector prominent.
Expansion of Green Office Stock
The green office stock is set to grow substantially. As of June 2024, approximately 67% of Grade A office buildings in the top six cities were green-certified. With nearly 70% of new Grade A office completions in Q2 2024 being green-certified, the trend is expected to continue. Over the next 2-3 years, the green-certified Grade A office stock is projected to exceed 600 million square feet.
“With increased inclination among occupiers for green-certified buildings, several Grade A developers are boosting their sustainable offerings. During Q2 2024, nearly 70% of new supply was green-certified. Developers are also retrofitting older office buildings to meet green standards. About 300-350 million square feet of commercial building stock older than 10 years have the potential for refurbishment, further expanding the green-certified office inventory,” noted Vimal Nadar, Senior Director and Head of Research at Colliers India.
The surge in green office space leasing and development reflects a broader shift towards sustainability in India’s commercial real estate sector, highlighting a significant step towards meeting environmental, social, and governance (ESG) goals.
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