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With 11-12% vacancy, commercial office builders bank on future promise

2021-08-07

Since the pandemic lockdowns began in March 2020, in most major cities 2-2.5 million sq ft of commercial office space has been given up, pushing vacancy rates to 11-12%. This despite the fact that many large format clients in the IT hubs of Bengaluru and Pune have held onto the office spaces and even met their rental commitments. Some others have been working with landlords for long-term deals with smaller payouts now and stepped up payments later in a pandemic-free future.

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After the bull run in 2019 when JLL estimated that a record 46.5 million sq ft of commercial office space was leased out largely by IT and ITeS companies for growth, 2020-21 has been entirely about changing strategies to ride out the pandemic wave. Most AAA IT-driven tech parks in Bengaluru, Pune, Hyderabad, Gurugram and Chennai saw users continuing with their space and rental obligations. However, for some, when leases came up for renewal, advisors such as Cresa Partners found landlords willing to negotiate on long-term deals.

Photo caption: Brookfield & Blackstone have an appetite for large commercial deals