Cognizant Renews Leases for 6.3 Lakh Sq Ft of Office Space in Pune
Cognizant Renews Leases in Pune Despite Planned Reduction in Office Space
27 May 2023
Cognizant Technology Solutions renews leases for 6.3 lakh square feet of office space in Pune.
The leases are located in two blocks of Quadron Business Park and span five years each.
Despite plans to reduce office space, the renewal showcases Cognizant's commitment to Pune and job retention.
Cognizant Technology Solutions, a renowned Nasdaq-listed IT software firm, has recently renewed two leases for a total of 6.3 lakh square feet (lsf) of office space in Pune. This move comes as the company plans to reduce its annual real estate costs and optimize the workspace in a post-pandemic hybrid work environment. Despite the earlier announcement of relinquishing 11 million square feet of office space, this renewal showcases Cognizant's commitment to the city and its intention to retain and create jobs. Let's delve into the details of these lease renewals and their significance.
The leased office spaces are situated in two blocks within the Quadron Business Park, a Grade A office park located in the Hinjewadi area of Pune. Embassy Office Parks REIT manages this portfolio, which currently has a 50 percent occupancy rate out of its 1.9 million square feet of leasable area. In Block 4 of the office park, Cognizant has leased four floors covering 2.6 lsf, while in Block 2, the company has leased four floors and an additional basement area encompassing 3.7 lsf.
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Both leases span a duration of five years each and feature a rent escalation of 15 percent after every three years. Cognizant is paying a monthly rent of ₹48.09 per square foot for the leased space in Block 4, amounting to ₹1.25 crore. The office space in Block 2, on the other hand, commands a monthly rent of ₹57.33 per square foot, resulting in a total of ₹2.10 crore.
Cognizant's decision to renew these leases is noteworthy, considering its earlier announcement of giving up a substantial amount of office space. The company aims to reduce its annual real estate costs by $100 million over the next three years, resulting in significant savings. This consolidation in office space is part of their strategy to invest in collaboration spaces in smaller cities while streamlining operations in large cities in India. The cost savings are estimated to reach $200 million, enabling Cognizant to optimize resources and drive efficiency.
Given Cognizant's significant presence in India, the decision to reduce office space will likely increase the availability of such spaces and potentially exert downward pressure on rents. However, the company's commitment to renewing the leases in Pune sends a positive message to the city's job market and the overall economy. Raja Seetharaman, the co-founder of Propstack, acknowledges the significance of this renewal and highlights its contribution to job retention and creation.