According to a joint report by international property consultant Colliers and real estate data and analytics platform Propstack, lease renewals were up 8 percentage points against the 15-month pre-pandemic period (January 2019-March 2020).
Enterprises are taking advantage of the favourable market conditions to renegotiate their working space requirements with renewals for office space leases accounting for 23% of the total leasing during the 15-month period beginning April 2020.
According to a joint report by international property consultant Colliers and real estate data and analytics platform Propstack, lease renewals were up 8 percentage points against the 15-month pre-pandemic period (January 2019-March 2020). Bengaluru followed by Mumbai accounted for the highest share of term renewals post pandemic (April 2020-June 2021).
“Occupiers are using the current favourable market dynamics to negotiate renewals. They are looking at more flexibility in leases too. Occupiers’ decisions are quicker than last year, with a focus on new-generation offices. Return of employees has started with many companies planning to get back more employees from January 2022. This will prompt occupiers to make leasing decisions quicker, Colliers India CEO, Ramesh Nair said.
While leasing declined from April 2020, there are some interesting trends, he said adding, firstly, Delhi-NCR and Bengaluru emerged as the most resilient office markets. Secondly, occupiers are renewing existing spaces, while postponing fresh leasing decisions. Thirdly, BFSI companies are continuing to expand their footprint, post pandemic.
“Occupiers are gradually getting back to their offices, but high-density office space may be a trend that has peaked. Covid may also accelerate a trend from leasing office space in the CBD (central business district) to suburbs. Corporates will face a challenge to design and modify existing office space to support a company’s established culture while following the new health protocols and, yet promote social interaction and collaboration,” said Propstack co-founder, Raja Seetharaman said.
Delhi-NCR and Bengaluru emerged as the most resilient cities in the office market post pandemic. Compared with 15 months pre-pandemic, these two cities saw the lowest decline in leasing in the 15 months beginning April 2020. Benagluru leasing was led by IT sector, followed by BFSI. In NCR, the IT sector’s leasing improved post pandemic. Overall, total leasing declined 39% in the 15 months post pandemic with Southern cities accounting for 52% of the leasing post pandemic.
Global and domestic BFSI firms expanded their real estate footprint post pandemic. BFSI firms accounted for 15% of the total share in leasing post pandemic, from 10% share earlier. Bengaluru, Chennai and Mumbai are seeing traction from BFSI companies led by global in-house centres, and insurance firms.