7,400 Office Leases of 90 Mn Sq. ft. Up for Renewal in Top 6 Cities in 2021
Lease renewal pipeline in Bangalore, Gurugram, Mumbai, Noida, Pune & Chennai highest in 2021 at approx. 90 Mn sq. ft. space when compared to 2022 & 2023
- These leases were entered into at lower rental rates of 3-5 years ago; with office leases usually signed for long-term, there is some room for upward revisions
- Office market may pick up pace from 2022 in wake of robust hiring by large corporates; large corporates likely to renew their leases, smaller companies may consider rationalizing space
- Of approx. 7,400 leases up for renewal in 2021, Mumbai has highest share at 44%, followed by Pune with 17% share; both cities severely hit by the pandemic
- Of approx. 90 Mn sq. ft. area leases up for renewal in 2021, IT capital Bengaluru has the highest share at 37%, followed by Mumbai with 19% share
- Year 2022 to see approx. 7,000 leases accounting for approx. 78 Mn sq. ft. up for renewal; in 2023 it is approx. 4,200 leases for over 55 Mn sq. ft.
Mumbai, 12 May 2020: Industry data and ANAROCK Research reveals that over 7,400 leases spanning approx. 90 Mn sq. ft. area will come up for renewal in 2021 across the top 6 commercial real estate hubs – Bengaluru, Mumbai, Pune, Chennai, Gurugram and Noida. 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 approx. 78 Mn sq. ft. come up for renewal, and approx..4,200 leases for over 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 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 Mn sq. ft. 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 – 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.
- Noida has the least number of leases due for renewal, comprising a mere 3% share of both total lease numbers and the overall area.
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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.”