[ecis2016.org] Mumbai mirrored a nation-wide trend of marked improvement in office real estate segment, with healthy pre-commitment levels in newly constructed commercial projects and improved net absorption
With better understanding of the expectations of the employees and greater adoption of the hybrid format of workplace best suited to their organisation, employers countrywide have reworked their office space strategies and taken a measured approach, in recent times. There was marked improvement in the office leasing activity in the country and a fairly healthy pre-commitment levels in newly constructed commercial projects – net absorption improved in calendar year 2021, with the last quarter witnessing the highest office space take-up in the last eight quarters.
You are reading: Net absorption, new completions of office space in Mumbai jumps in 2021
Mumbai saw healthy occupier confidence, in spite of the repetitive waves of the Covid-19 pandemic. There were decent pre-level commitments witnessed for new buildings in Mumbai’s commercial real estate market while the older commitments were also honoured. Office spaces in Mumbai saw a 41% jump in net absorption of Grade A office space in 2021 at 3.74 million sq ft (msf) as compared to 2.66 msf in 2020, according to a report by JLL India.
Even new completions in Mumbai’s commercial property market saw a significant jump in 2021 of 62% at 8.18 msf as against just 5.06 msf in 2020, according to a JLL India report.
Source: JLL India
However, the work from home culture led to an increase in vacancy levels, which stood at an average of 15.82% across all the months of 2021, as compared to 13.9% in 2020. The rents stood firm in Mumbai’s Grade A office space market at Rs 126.22 per sq ft per month in 2021, almost the same as Rs 126.77 per sq ft per month in 2020, according to the report by JLL India.
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Mumbai’s secondary business district (SBD) of Bandra Kurla Complex continued to do well in 2021 in terms of office space activity. Even Navi Mumbai and the western suburbs performed well in 2021. Various sectors like BFSI, IT/ITes, manufacturing, industrial and consultancy, drove up the leasing activity in 2021.
The year 2021 saw some significant project completions like Loma IT Park Phase-II (1 msf), CBD 614 (0.13 msf), Polson Center (0.15 msf in the western suburbs), INS Tower (0.75 msf in BKC) and Lodha Palava Phase-II (0.15 msf in Thane). There were some exits by a few companies while new corporates came and took up that space many a times in Mumbai’s commercial property market. The occupiers were slightly cautious and renegotiated rents a bit in order to reduce their real estate costs. They also relocated to new projects that had lower rents. Even the landlords were seen to be flexible to accept the demands of occupiers to an extent. At times, they offered rent-free periods. They even absorbed capex costs for the occupiers for fit-outs in the buildings. On the investment front, Mumbai’s office space market saw strong appetite, which seems to be continuing in 2022.
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Scheduled completions in Mumbai’s commercial property market
Some of the major Grade A office projects that are scheduled to be completed in 2022 are ‘One International Centre – Tower 4’ in SBD central having a gross leasable area of 0.8 msf, ‘Gigaplex B9’ in Navi Mumbai having a gross leasable area of 1.2 msf and ‘KRC Altimus’ in SBD central having a gross leasable area of 1 msf. Then there is ‘Centaurus’ in Thane having a gross leasable area of 1.9 msf which is scheduled to be completed in 2023 and ‘Oberoi Commerz 3’ in the western suburbs having a gross leasable area of 2.8 msf which is likely to be completed by 2024, according to a report by JLL.
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Warehousing and logistics segment
Leasing in the warehousing and logistics sector across the country jumped 39% year-on-year from about 20 msf in 2020 to reach around 28 msf in 2021. The 3PL logistics companies drove up leasing and accounted for about 41% share. This was followed by segments like e-commerce (18%), retail (11%) and engineering & manufacturing (11%). Even the total supply of warehousing and logistics spaces in the country jumped by 38% from 19 msf in the year 2020 to reach around 27 msf in 2021, according to a report by CBRE.
Source: CBRE
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Mumbai’s warehousing and logistics property market witnessed net absorption of 4.2 msf of space and 2.8 msf of new supply in 2021. 3PL accounted for 54% of the absorptions in 2021, followed by engineering & manufacturing at 24% and e-commerce at 12% in 2021, according to the report by CBRE.
Source: CBRE
The prominent deals in the Mumbai warehousing space market was that of DB Schenker taking up 4 lakh sq ft space on rent in Antariksh Logipark located on Bhiwandi NH-3. Another key deal was that of Nilkamal leasing 3.75 lakh sq ft space in Shakti Logistics Park located on Bhiwandi NH-3. Another prominent deal was that of NDSS taking up 2.5 lakh sq ft space in New Era Warehousing in Navi Mumbai-Taloja location, according to CBRE.
Source: CBRE
The warehousing space hub of TTC MIDC Industrial area saw rents increasing by 18%-19% in 2021 over 2020.
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