In a notable shift towards sustainability, the share of green office leasing in India has reached 16% during the 2022-2023 period, with expectations to touch 20% within the next year, according to a report by JLL – CRE Matrix released on January 18. The report highlights the significant role played by Global Capability Centres (GCC) and institutional landlords in driving the adoption of green leasing practices, with Hyderabad and Bengaluru leading the way, constituting 64% of the total green lease market.
Rising Adoption and Key Findings
Examining 1,530 leases between January 2018 to September 2023, encompassing a total area of over 225 million square feet, the report reveals a quadrupling of the share of green leasing during the 2022-2023 period compared to pre-COVID years (2018-2019). This translates to a remarkable 132% increase in leased area, signaling joint efforts by asset owners and occupiers to promote responsible leasing practices.
Challenges and Areas of Focus
Despite the surge, the report acknowledges challenges such as the lack of industry-wide guidance, transparency issues, legal complexities, and split incentives hindering widespread adoption. Waste management, energy efficiency, and data sharing emerge as key aspects of green leasing, with clauses focusing on these elements. The report emphasizes the need for collaboration-based green leases to ensure operational efficiency and environmental performance.
Industry Insights and Future Trends
Samantak Das, Chief Economist and Head of Research and REIS, India, JLL, notes the increasing incorporation of sustainability into the boardroom agenda, with the Indian market making significant strides. Abhishek Kiran Gupta, CEO and Co-founder of CRE Matrix, foresees the next two decades shifting focus to green leasing, estimating a penetration of around 20% within the next 1-2 years. Gupta predicts a significant rental arbitrage of 10-15% between green and non-green leases as both landlords and occupiers recognize the benefits of sustainable leasing practices.
