As many as 65 percent of leases that are getting over this year are less than 10,000 sq ft and leases less than 1 lakh sq ft make up 25 percent of the rentals.
Commercial leases worth Rs 6,800 crore of annual rent are expected to get over in 2021 of which 1,802 are in Mumbai alone, followed by 905 in Bengaluru, a report by Propstack has said.
As many as 65 percent of leases that are getting over this year are less than 10,000 sq ft and leases less than 1 lakh sq ft make up 25 percent of the rentals, it said.
As many as 19 percent are for offices that are spread across 10,000 to 25,000 sq ft; 8 percent spread across 25,000 to 50,000 sq ft, as many as 5 percent are for offices of sizes 50,000 to 1 lakh sq ft and 3 percent are offices less than 1 lakh of sq ft space, the analysis said.
The total number of office space leases across the top eight cities was 4,862, it said.
As many as 602 leases are expected to get over in Pune; 482 in Gurugram, 317 in Chennai, 237 in Hyderabad, 259 in Delhi, 217 in Noida and 41 in Kolkata.
“Considering that many corporates have adjusted to work-from-home (WFH), we believe that 2021 will be a year of reckoning for corporate real estate in India. Mumbai has the highest rent per sq ft while area absorption is the highest in Bengaluru,” said Raja Seetharaman, co-founder at Propstack.
With India recording one of the highest WFM productivity, both city scenarios will be tested. In any case, corporate real estate will continue to evolve and every company will find a balance by combining regular office and work from home, he said.
The monthly rent was the highest in Mumbai at Rs 176 crore per month, followed by Rs 152 crore per month in Bengaluru and Rs 71 crore per month in Gurugram, it said.
The maximum commercial area expiring is in Bengaluru at 26.1 m sq ft, followed by Mumbai at 15.5 m sq ft and Chennai at 10 m sq ft. The total area expiring across the top eight cities was 81.4 m sq ft, it said.
Real estate experts say that given the impact of the COVID-19 pandemic on commercial leasing, smaller companies of less than 10,000 sq ft floor plate may be exposed to higher risk this year than larger spaces of 50,000 sq ft to 1 lakh sq ft leased by big firms.
The pandemic led to a temporary challenge with most companies allowing their employees to work from home for most of the year and employers reassessed their office needs and strategized for the future.
According to a report by Colliers, Mumbai and Pune saw their demand more than halve in 2020 as they recorded a drop of 62 percent and 60 percent, respectively, in their gross absorption during the year.
This was because Maharashtra saw one of the longest and toughest lockdowns owing to the pandemic, which affected both demand and supply of commercial offices. Secondly, supply has also been relatively low and given that vacancy rates in Mumbai (13.5 percent) and Pune (9.5 percent) are low, there was not much vacant space to transact in 2020.
According to the report, 2020 witnessed commercial office gross absorption of about 34 million sq ft across the top six cities in India, a fall of about 41 percent from 2019, which saw demand at an all-time high.
Bengaluru accounted for 33 percent of the gross absorption at about 11.2 m sq ft. This was followed by Hyderabad and Delhi NCR with a share of 18 percent and 17 percent, respectively. The southern cities accounted for 63 percent of the total gross absorption during the year, the report had said.
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