This regulatory push has resulted in a notable increase in leasing of green-certified office spaces across the top six cities, totalling 13 million sq ft in the second quarter of 2024, showed data from Colliers. These green spaces now account for 82% of overall leasing activity for the period.
“Over the last few quarters, developers, investors, and occupiers in the office market have increasingly embraced the adoption of sustainable elements in their portfolios. This also reflects occupiers’ strong commitment to align their sustainability goals with the country’s overall sustainability targets. Since 2023, about 70–80% of the space uptake by engineering & manufacturing, technology, and BFSI players has been in green-certified buildings,” said Arpit Mehrotra, managing director, office services, India at Colliers.
As per the report, technology hub Bengaluru, and the country’s financial capital Mumbai recorded the highest green-certified building leasing, capturing around 75% of market share in the first half of 2024, with technology, engineering, and manufacturing firms showing a higher preference for leasing spaces in green-certified buildings.
“The trend is expected to further accelerate in the next few years. Moreover, Sebi’s mandatory sustainability reporting further provides a thrust for occupiers, investors, and developers to increasingly consider green portfolios while meeting their ESG targets,” said Mehrotra.
Sebi has introduced new measures to simplify disclosure of environmental, social, and governance (ESG) information by listed companies and their value chain partners. Under the new proposal, companies will be required to disclose ESG metrics for value chain partners who individually account for 2% or more of a company’s purchases or sales by value. Initially, the disclosure for value chain partners will be voluntary for the first year rather than mandatory on a comply or explain basis. Real estate developers are increasingly aligning their offerings with global sustainability standards, simultaneously presenting various tangible benefits to their tenants, including lower operational costs, improved indoor air quality, and enhanced employee productivity.
Currently, LEED, GRIHA, and WELL are some of the prominent green certifications available in the Indian market that validate buildings as ‘green’ by assessing various parameters such as energy consumption, waste generation, and alignment of design with health and wellness aspects.
“Both domestic and multinational companies are increasingly prioritising ESG compliance, driving a significant demand for green buildings. Builders are responding to this shift by focussing on sustainable practices and environmentally-friendly construction to meet the growing expectations of conscious businesses and investors. Our ongoing and upcoming developments are all going to be ESG compliant,” said Mahesh Khaitan, executive director of Sattva Group.
Colliers also said in its report that since 2023, about 80% of leasing activity by technology, and engineering & manufacturing firms have been in green-certified buildings.
At a national level, the tech sector comprised about 27% of the total space leased in green-certified buildings since 2023, followed by occupiers from engineering & manufacturing and BFSI sectors, each with about 19% share.
Green-certified office space has attracted interest from managed office operators, as flexible office solutions become more prominent in the corporate real estate portfolio. Many firms are also retrofitting ageing office stock, incorporating sustainable elements into overall building design and construction.
“We prioritise the occupation of green-certified buildings. With increased inclination amongst occupiers for flexible green-certified buildings, we are also increasing our sustainable offerings in our overall commercial portfolios. There are many old assets that we are acquiring and refurbishing to make it a green complaint,” said Shesh Rao Paplikar, CEO, Bhive Group.
“About 300-350 million sq ft of commercial building stock older than 10 years hold the potential to get refurbished in the next few years and add to the green-certified office stock of the country,” he said.
In line with rising demand, green building stock is also seeing an increase. According to Colliers, as of June, about 67% of Grade A office space in the top six cities were green certified. Bengaluru and Delhi NCR account for about half of the green office stock. In the next two to three years, the majority of the over 150 million sq ft of Grade A office developments in various stages of construction across the six major cities are likely to be green certified, expanding Grade A green stock to over 600 million sq ft, according to Colliers.
