IBM renews lease for 6.25 lakh sqft office space in Bengaluru

BENGALURU: US-headquartered technology firm IBM has renewed its lease agreements for 625,000 square feet of office space across Bengaluru, even as the work-from-home model has become the mainstay for many companies since the Covid-19 outbreak, said two people aware of the matter.

IBM is the single largest tenant for Embassy REIT, contributing nearly 12% to its rental revenue.

“The renewed agreement will span more than nine years. The lease was due for expiry in 2021-2022,” said one of the persons, who did not wish to be identified.

IBM had leased 3.6 million sq ft of office space from Embassy REIT as of December 31, 2018 across Pune and Mumbai.

“IBM is also negotiating for an additional 500,000 sq ft space in Manyata Tech Park, Bengaluru, but due to Covid-19, the signing is being delayed,” said the second person.

The technology firm is one of the largest occupiers of office space in the country and has more than 10 million square feet of rented office space across major cities such as Bengaluru, Hyderabad, Noida, Gurgaon and Kolkata.

IBM has more than 100,000 employees in India and temporary staff too.

“Clearly, the unprecedented crisis, which includes Covid and geopolitical events, has compelled most companies to reconsider their existing portfolios and expansion plans,” said Raja Seetharaman, co-founder, Propstack. “But the on-ground impact is not as dramatic, barring negotiations for better rents and incentive packages. The broader impact will emerge over the next few quarters and depend on how quickly we are able to reopen our offices.”

The office leasing segment has witnessed lower impact of Covid-19 so far. Over the past six months, fresh leasing transactions have reduced significantly due to the operational challenges posed by the pandemic as well as the cautious approach adopted by companies towards office expansion and consolidation plans. However, large firms such as Amazon, Wells Fargo and Google have continued to expand fresh leasing.