Infosys Technologies has taken up around 5 lakh square feet of office space in Bengaluru's Northgate for a monthly rent of around Rs 2.3 crore, documents accessed by Propstack shows, as IT workforce returns to offices across the country.
The lease deed, signed between Modern Asset and Infosys Limited on May 12, 2022, is for a period of 10 years beginning June 1, 2022.
“This transaction is significant in many ways. Firstly, despite the hybrid workspace environment, companies continue to transact large space. Secondly, while companies set up offices in Tier 2-3 cities, space in Tier 1 cities continues to be relevant,” said Raja Seetharaman of Propstack.
Modern Asset Management has developed the Grade-A SEZ tech park. The campus is known as North Gate Phase 2 and has an aggregate super built-up area or leasable area of 5,49,492 sq ft in Wing A, comprising three basements, ground floor and some upper floors, the lease deed shows.
Infosys’ move reiterates that the long-term growth story of the Indian commercial office market, dominated by IT-ITeS occupiers who account for 40 percent to 45 percent of leased spaces, is intact, said Bappaditya Basu, Chief Business Officer, Anarock Commercial.
The IT services firm, which is headquartered in Bengaluru, leased portions of the ground floor measuring 20,785 sq ft, first floor that measures 43,164 sq ft, second floor 57,890 sq ft, third floor 57,779 sq ft and fourth floor measuring 58,984 sq ft. The total area of 2,38,602 sq ft has been referred to as Tranche 1 area in the deed.
The company has also taken on lease the fifth floor spread across 58,908 sq ft, the sixth floor measuring 54,656 sq ft, the seventh floor measuring 58,925 sq ft and the eighth floor measuring 58904 sq ft, aggregating to 2,31,497 sq ft and referred to as Tranche 2 in Wing A in the deed.
The two together make up a super built-up area of approximately 4,69,999 sq ft along with 650 car parking slots.
From December 1, 2022, the company will pay Rs 50 per sq ft a month plus taxes aggregating to Rs 1.19 crore for Tranche 1, the documents show.
For Tranche 2, the company will, from June 1, 2023, start paying Rs 50 per sq ft plus taxes on the super built-up area of 2,31,397 sq ft, aggregating to Rs 1.16 crore.
The rent will escalate at 12 percent every three years calculated from the lease commencement date– three years from June 1, 2022 and three years thereafter during the tenure of the lease and the subsequent renewals.
The company put down a security deposit of Rs 16.4 crore, the lease deed showed.
The copy will be updated once the company responds to Moneycontrol’s queries.
Seetharaman said TCS, India’s biggest IT services company, had announced that a significant percentage of its staff would work from home but subsequently, the percentage of staff working from home was lowered.
“Now, we have Infosys giving the industry a similar signal. All that said, I’m certain that the office space environment will remain dynamic and evolve over the next few years,” he added.
While the coronavirus pandemic hit commercial office leasing at a macro level, IT-ITeS occupiers retained office spaces as business was booming with technology adoption at its peak, he said.
With Covid receding, employees were coming back to offices either full-time or in a hybrid model. Considering that Bengaluru has a sub-10 percent vacancy across Grade A offices, rentals were likely to move up and this was the appropriate time to seal the deal, Basu said.