Leases for 90 Mn Sq Ft of Office Space Up for Renewal in Major Cities

With the highest lease expiry pipeline compared to the next two years, over 7,400 leases, spanning around 90 million square feet area will come up for renewal in 2021 across the top-six commercial real estate hubs including Bengaluru, Mumbai, Pune, Chennai, Gurugram, and Noida, according to industry data and ANAROCK Research. Comparatively, 2022 will see nearly 7,000 leases for around 78 million sq. ft. come up for renewal, and around 4,200 leases for over 55 million sq. ft. in 2023.

In 2021, Mumbai has the highest share of expiring leases at about 44 per cent, followed by Pune with a 17 per cent share. These two cities have been among the worst-affected by the second wave, a statement by ANAROCK said. Interestingly, in terms of area, Bengaluru has the largest share at about 37 per cent, with Mumbai coming in a distant second with a share of about 19 per cent.

Prashant Thakur, Head, Research, ANAROCK Property Consultants, said the office market has been under strain since the pandemic came in. “However, the IT/ITeS sectors have been on a hiring spree in 2020 and 2021 due to massive business accruals. To accommodate these employees in the future when we see their gradual return and adoption of hybrid workplace practices by infotech giants, office space demand will grow. Office demand also is expected to gather momentum from 2022 in the wake of robust hiring by large corporates. These big corporates will definitely renew their leases, though some of the smaller companies may consider rationalizing space,” he said.

“The leases coming up for renewal in 2021 were entered into at much lower rentals - at rates that prevailed 3 to 5 years ago - since office leases are usually signed for the long-term. There is some room for rental escalation in many of these leases,” he added.