Companies give up 78 football fields in office space – Times of India

BENGALURU: Indian corporates and multinationals have given up over 6 million sqft of grade A commercial office space (equivalent to about 78 football fields) in the first half of this year, mainly due to the impact of the pandemic that made them downsize their operations or delay expansion plans.
More than half of that space releases have happened in Bengaluru, the biggest market in the country for corporate office leases every year and where, till Covid struck, there was an acute shortage of space.
About 4 million sqft of unused areas have come into the Bengaluru market. Accenture, which has a huge presence in the city, has exercised options not to take up and, in some cases, release some office spaces totalling to about 0.8 million sqft across multiple locations in the tech city, according to people familiar with the matter.
Other companies that have made similar moves include MuSigma (0.2 million sqft), Swiggy (0.1), Volvo (0.1), and GE (0.3), according to data from independent property consultants. IBM is said to be renegotiating all its existing leases in the country and especially Bengaluru, where it holds almost 5 million sqft.
“The average expense per employee usually comes to Rs 15,000 per seat a month and now, with so many working from home, companies have realised that the savings of giving up space will directly go to the bottom line,” said Shrinivas Rao, CEO (Asia-Pacific) at workplace solutions firm Vestian Global. Corporates are also evaluating whether they will continue to need the same number of seats as, in the foreseeable future, not all employees are expected to come back.
Infosys (0.3 million sqft) and HCL (0.3), consultants said, gave up spaces in Electronic City as their leases came to an end and the companies were not keen to renew. “But these may not be because of the Covid impact. Many firms, after a 7-10 year lease, would want to move to a newer space,” said a senior executive in a consultancy.
In Mumbai, Reliance Capital has vacated most of its 0.7 million sqft space in Reliance Centre in Santa Cruz and offered it on lease. Yes Bank is also planning to vacate some of the leased premises. In Chennai, companies are said to have vacated 0.8 million sqft between March and June.
Space release and delaying expansion plans even after signing a letter of intent (LoI) is not uncommon in the commercial market. A company can feel that market conditions are not conducive for its expansion plans even when it has notified a developer of its intention to take space.