Companies’ rent and lease expenses have seen a significant decline relative to the money they make since the pandemic.
Illustration: Dominic Xavier/Rediff
Rent and lease expenses were the equivalent of 0.72 per cent of the total value of goods produced (sales and change in stock) in financial year 2018-19 (FY19), according to figures from the Centre for Monitoring Indian Economy (CMIE).
This has dropped to 0.38 per cent in FY25.
The declining rental and lease expense trend seems to hold across key sectors in the listed space.
Manufacturing, for example, has seen a decline from 33 basis points of sales and change in stock in FY19 to 20 basis points in FY25.
Non-financial services has seen a decline from 1.22 per cent of sales and change in stock to 0.42 per cent over the same period.
The numbers reflect companies where such data is available in the financials.
The trend may reflect a rise in sales during this period.
Listed non-financial companies have seen sales grow over 60 per cent in the period under consideration.
A change in working practices geared towards more flexibility may also have played a role, according to experts.
Flexible workspaces provider WeWork India Management listed on bourses on October 10.
The company was valued at over ₹8,400 crore on listing day.
The use of shared spaces and hybrid models of working could be a factor in declining expenses, according to the chief investment officer at an asset manager.
The pandemic has changed workspaces with companies relying more on flexibility than before, agreed independent market expert
Ambareesh Baliga.
Flexible work arrangements now often involve spending fewer days a week in office which can reduce space requirements to some extent.
“A lot of people still work from home,” he said.
Start-ups and large enterprises are increasingly embracing flexible workspaces, according to an industry overview in documents filed as part of the WeWork initial public offer.
“In flexible workspace solutions the upfront capital required to build the facility is usually invested by the operator, which can support the end user in circumventing the need for upfront capital investment in their office fit outs.
“This may provide an option to end user organisations to allocate the same capital towards their core business,” it said.
This is not to say that office spaces are not in demand.
The drivers of real estate demand may have changed. Global capability centres (GCCs), for example, accounted for 32 per cent of office transactions in the September 2025 quarter, according to property consultancy Knight Frank’s India Real Estate report.
The GCC segment performs back-office and other functions for foreign companies with a cost advantage in India.
Flexible office space operators have taken up 3.8 million square feet in the third quarter of 2025, the report added.
This represented a fifth of the total space transacted and a 27 per cent year-on-year growth in volumes, according to Knight Frank.
“Flex spaces are now an established part of the growing Indian office market, consistently accounting for over 20 per cent of the market over the past four quarters,” it said.
