Over 7,400 workplace leases spanning close to 90 million sq ft location will come up for renewal in 2021 across the top rated 6 industrial genuine estate hubs – Bengaluru, Mumbai, Pune, Chennai, Gurugram and Noida, according to business information and ANAROCK Research.
Data additional reveals that 2021 has the highest lease expiry pipeline when compared to the next two years – 2022 and 2023. Year 2022 will see practically 7,000 leases for approx. 78 mn sq ft come up for renewal, and approx 4,200 leases for more than 55 mn sq ft in 2023.
Of the approx. 7,400 leases expiring in 2021, Mumbai has the highest share at about 44%, followed by Pune with a 17% share. These two cities have been amongst the worst-impacted by the second wave. The effect on leasing activity there more than the year bears watching.
The total quantity of leases coming up for renewal in 2021 account for 90 mn sq ft location. Interestingly, in terms of location, Bengaluru has the biggest share at about 37%, with Mumbai coming in a distant second with a share of about 19%.
#Of the total quantity of leases coming up for renewal in 2021, Chennai comprises a 5% share – in terms of general location, it has 12% share.
#Gurugram has a 15% share every in terms of quantity of leases due for renewal and total location.
#Noida has the least quantity of leases due for renewal, comprising a mere 3% share of each total lease numbers and the general location.
Commenting on the exact same, Prashant Thakur, Director & Head – Research, ANAROCK Property Consultants, says, “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 rationalizing space.”
“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.”
Key Trends Amid the 2nd Wave
The second wave in India is far more excruciating than the very first, and some providers are after once more in wait-and watch mode with their genuine estate choices. Leasing activity has begun to tame down. This is also validated by the reality that typical vacancy levels in Grade A workplace space across the top rated 7 cities is up once more, breaching the 15% mark. Rising Covid-19 instances in cities like MMR and Bengaluru – the markets with highest industrial demand – and stringent curfew restrictions are lead to for concern.
However, Mumbai and Pune are currently starting to see a decline in every day instances. Meanwhile, big IT/ITeS providers are hiring in bulk to fulfil the surge in work orders and have a healthier pipeline for the existing year as properly. Recent ANAROCK Research revealed that the top rated 4 Indian IT/ITeS firms – TCS, Infosys, HCL and Wipro – alone hired approx. 42,000 workers in the very first nine months of FY 2021. Also, multinational majors Cognizant and Capgemini hired practically 39,500 workers in CY 2020, with bulk hiring plans for CY 2021. They strategy to employ ~23,000 and ~30,000 workers respectively in the CY 2021.
Many other IT firms are on a hiring spree amid acceleration in their general small business post the pandemic. This sooner or later bodes properly for general workplace space demand in 2022 and 2023, when we could see gradual return of normalcy coupled with the newly added workforce. The IT/ITeS sectors are amongst the prime drivers of general leasing activity in the top rated cities. Bulk hiring by these firms will influence demand for massive high-quality workplace spaces.