Office leasing has had an upward trajectory, aided by a quick turnaround towards Grade-A properties. This was one of the highlights of the recently held analysts’ meeting of Mindspace Business Parks REIT.
The company’s management expects physical occupancy to increase to 60-70% from 30-35% on May 22. For FY23, the office space area set for lease termination is 1.1 million square feet (msf), of which at least 60% of the area is expected to be re-leased, management told analysts.
In a June 6 report, analysts at ICICI Securities Ltd said they expect office leasing Physical occupancy in offices currently ramps to over 50% from 25% in India to see a strong pick-up in FY23.
“With (Mindspace) REITs comprising ~43% of tenants in the technology domain, as well as global in-house captives such as financial services and telecommunications/media, we believe the REIT is well poised to benefit from the pickup in office leasing.” ,” added the ICICI Securities report.
According to the company’s management, existing tenants are seeking incremental space to accommodate the incremental hiring.
Further, the management highlighted that as of March 2022, the company had around 3.1msf of area under construction, of which 1.7msf is expected to be commissioned in FY23. The company also has another 4.6msf under development, so the total inventory pipeline is 7.6msf.
“In the near term, Mindspace will commission at 1.7 msf (70% pre-lease) in FY2023, while the 3.8 msf vacant area may provide additional impetus to earnings,” said an analyst at Kotak Institutional Equities.
Meanwhile, the company’s shares touched a new 52-week high of Rs. 369.48 on the National Stock Exchange in April and the stock currently trades at 351. Apart from office leasing trend, the stock’s fate will depend on the extent of recovery in office rentals, said analysts.