Twin challenges for office developers in 2021: Low demand, renewals

Occupancy levels at the end of March was down 88.9 per cent, or 390 bps over the year-ago period.

Developers and owners of office buildings could face twin challenges this year — lower demand and filling up spaces up for renewal.

The pandemic notwithstanding, prolonged work from home is is also expected to pose a major challenge, said analysts. According to rating firm India Ratings & Research (Ind-Ra), the negative demand created by the work-from-home culture, along with a reduction in fresh leasing activities due to a weak economy, could easily shave off 40 per cent of the annual demand over the next few years and result in an over 500-basis point (bps) increase in vacancy levels over FY21 (2020-21)-FY23