6,000 Cr Lease Expiries Test Commercial Real Estate

According to real-estate data platform Propstack, commercial office lease expiries worth annualised rent of Rs 6,000 crore (or monthly rent of nearly Rs 500 crore) are coming up in FY21. “Of the entire amount, nearly 60 percent of the value of the lease expiries are in Bengaluru and Mumbai alone. The industry will be keeping a close watch on how these renewals will pan out as businesses plan to keep a check on costs in the current economic scenario,” says Sandeep Reddy, co-founder of Propstack.

A closer look at the data indicates that this encompasses nearly 72.2 million sq. ft, of which Mumbai alone accounts for 16.1 million sq. ft with 35 percent of the rent value. Most lease contracts have a tenure of three to five years with an annual rent appreciation clause; some larger information technology and foreign banks lease out for nearly 10 years. Both types of leases are included in this data set. Between 2010 and 2019, nearly 319 million sq. ft of office supply has been created in the country.

To put it in context, in a normal year, the Indian office market sees net new absorption of about 33 million sq. ft; calendar year…