Office Space Demand to Shrink

With the lockdown looking at yet another extension, lease rentals between Rs 250 and Rs 300 a sq ft per month may come under pressure as per property experts. The rents could decline by at least 20% to 30% as companies cut costs and retrench employees. Corporates occupying large floor plates may want to renegotiate the rentals or take a call on whether to continue occupying the offices. Another debilitating after-effect of the lockdown on the commercial market will be many more empty offices as companies look to reduce expenditure and employee cost. Before the lockdown began, about 86 million sq ft or 12% of office space in the top eight Indian cities was vacant, of which 18 million sq ft was in the Mumbai Metropolitan Region (MMR). “This could increase to 32% if the lockdown continues for another four months,” warned real estate research firm Liases Foras. In the worst-case scenario, if the effects of the lockdown prolong till September, the vacant office space in these eight cities could reach 225 million sq ft, crippling the commercial market, according to real estate research firm, it said.