Over 7,400 office space leases spanning around 90 million square feet area will come up for renewal in 2021 across the top six cities — Bengaluru, Mumbai, Pune, Chennai, Gurugram and Noida, as per the Anarock data.
Data further reveals that 2021 has the highest lease expiry pipeline when compared to the next two years, 2022 and 2023.
The next year will see nearly 7,000 leases for around 78 million square feet come up for renewal and around 4,200 leases for over 55 million square feet in 2023.
Out of the around 7,400 leases expiring in 2021, Mumbai has the highest share 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. The impact on leasing activity there over the year bears watching.
The total number of leases coming up for renewal in 2021 account for 90 million square metres area. 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.
Anarock Property Consultants Director & Head of Research Prashant Thakur 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 a future when we see a gradual return of employees 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 rationalising space,” he added.
“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.