IBM has renewed its lease for about 830,000 square feet of office space in Bengaluru, entailing an annual rental of ₹143 crore, in one of the largest single transactions in the segment this year.
The move will help secure the US-based technology firm’s presence in a key business market in India, said people familiar with the matter.
The long-term lease in Embassy Golf Links Business Park will see IBM occupy three buildings in the commercial property owned by Embassy REIT, according to a lease document shared by Propstack, a data analytics firm.
“The lease also has provisions for a 12% escalation after five years and a 15% escalation after 8 years. The lease agreement spans 10 years, with a monthly rental rate of ₹140 per square foot,” said the document.
Embassy REIT did not comment on the transaction.
The country’s first publicly listed real estate investment trust leased about 1.9 million sq ft of office space across 22 deals in the first quarter of this financial year, with global capability centres being the primary drivers of demand, accounting for 70% of the leasing activity. IBM is one of the largest tenants for Embassy REIT, contributing nearly 7% to its rental revenue.
In 2021, IBM had signed lease agreements for 500,000 sq ft of office space in a special economic zone in Bhartiya City, Bengaluru, for 15 years. A year earlier, it had renewed the lease for 625,000 sq ft of space in Embassy Manyata Business Park in Bengaluru.
IBM is a major player in the office space sector, with a portfolio of about 10 million sq ft of leased space in key Indian cities including Bengaluru, Hyderabad, Noida, Gurugram, and Kolkata. The technology company has about 100,000 employees in India, making up about one-third of its global workforce.
Occupants and lessees of extensive commercial office buildings nationwide, including major corporations, continue to opt for leasing or renewing their lease agreements, demonstrating their preference for traditional office spaces despite the increasing popularity of remote work arrangements. Top occupants include Bosch, Synopsis, State Bank of India, Tech Mahindra and HCL Technologies.
The office space market in the country saw a 19% year-on-year increase in leasing in the first half of 2024, reaching 29.4 million sq ft across the top six cities. The trend indicates strong occupier confidence and market conditions, according to a report by professional services company Colliers. The technology, engineering, and manufacturing sectors collectively drove about half the demand in the second quarter of the year, it said.
