By Dominick Rodrigues

Mumbai : A massive 90 million square feet of space will be highlighted through 7,400 leases coming up for renewal in 2021 across the top 6 commercial real estate hubs – Bengaluru, Mumbai, Pune, Chennai, Gurugram and Noida, according to Industry data and ANAROCK Research.

The Data further reveals that 2021 has the highest lease expiry pipeline when compared to the next two years – 2022 and 2023. Year 2022 will see nearly 7,000 leases for approximately 78 million square feet come up for renewal, and approximately 4,200 leases for over 55 million square feet in 2023.

 Of the 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 among the worst-affected by the second wave and the impact on leasing activity there over the year is being watched by industry.

 While the total number of leases coming up for renewal in 2021 accounts for 90 million square feet area, Interestingly — in terms of area –, Bengaluru has the largest share at about 37%, with Mumbai coming in a distant second with a share of about 19%.

Of the total number of leases coming up for renewal in 2021, Chennai comprises a 5% share, while in terms of overall area, it has 12% share.

Gurugram has a 15% share each in terms of number of leases due for renewal and total area, while Noida has the least number of leases due for renewal with a 3% share of both total lease numbers and overall area.

Describing the office market as +being under strain since the pandemic came in,+ Prashant Thakur, Director & Head – Research, ANAROCK Property Consultants, said that 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,” he said, adding “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,” he noted.

Highlighting the second covid-19 wave in India as far more +excruciating+ than the first, he said some companies are once again in wait-and watch mode with their real estate decisions. “Leasing activity has begun to tame down and this is also validated by the fact that average vacancy levels in Grade A office space across the top 7 cities is up again, breaching the 15% mark. Rising Covid-19 cases in cities like MMR and Bengaluru – the markets with highest commercial demand – and stringent curfew restrictions are cause for concern.”

 However, Mumbai and Pune are already beginning to see a decline in daily cases. Meanwhile, major IT/ITeS companies are hiring in bulk to fulfil the surge in work orders and have a healthy pipeline for the current year as well. Recent ANAROCK Research revealed that the top four Indian IT/ITeS firms – TCS, Infosys, HCL and Wipro – alone hired approximtely 42,000 employees in the first nine months of FY 2021. Also, multinational majors Cognizant and Capgemini hired nearly 39,500 employees in CY 2020, with bulk hiring plans for CY 2021 including ~23,000 and ~30,000 employees respectively.

 “Many other IT firms are on a hiring spree amid acceleration in their overall business post the pandemic. This eventually bodes well for overall office space demand in 2022 and 2023, when we may see gradual return of normalcy coupled with the newly added workforce. The IT/ITeS sectors are among the prime drivers of overall leasing activity in the top cities, and bulk hiring by these firms will influence demand for large quality office spaces.”