Can WFH adoption upset the apple cart for office leasing by Reits?
Subscribe to enjoy similar stories.Committed occupancy levels – office spaces where leases have already been signed with tenants but are yet to commence – for key listed real estate investment trusts (Reits) exceeded the 90% mark in FY26. Management executives at Reits are largely upbeat on demand prospects, providing room for occupancy improvement.Embassy Office Parks REIT sees occupancy rising to 92-93% and Brookfield India Real Estate Trust pegs it at 96%.
Mindspace Business Parks REIT anticipates the reading to reach about 97%, excluding the Pocharam property in Hyderabad, which may be divested.To achieve these targets, the pace at which Reits are able to lease new spaces is crucial. These companies were on an organic and inorganic expansion spree in FY26 to tap potential demand.
But the West Asia war has triggered macro-economic concerns, which can be a roadblock for office leasing.Prime Minister Narendra Modi recently appealed to businesses to re-introduce work from home (WFH) and virtual meetings to cut fuel consumption. As per media reports, companies that have opted for hybrid/WFH include RPG Group, PwC India, IndusInd Bank and HDFC Bank.Large-scale adoption could become a déjà vu moment for office leasing, harking back to when demand took a hit in the aftermath of the covid-19 pandemic, leading to elevated vacancies and stagnating rents.
Over FY21-23, higher exits—predominantly by IT/ITeS firms—dragged net leasing down, said Nuvama Research. The exits moderated thereafter and net leasing started improving in FY24.The Indian IT sector is facing troubles of its own and consequently, its share in office space leasing has declined.
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