Popularly known as the ‘satellite city’, it has a growing footprint of grade-A, and superior grade-A, office developments (Thinkstock Photo/Representational)
By Karan Singh Sodi
While the gross average rental of Mumbai rose only 0.5 per cent year-on-year (y-o-y) in the second quarter of 2017, the increase in office rentals was the highest in Navi Mumbai — at more than eight per cent. Excluding Thane and Navi Mumbai, the micro-market of western suburbs’ registered a growth of 1.5 per cent in its average rent, closely followed by secondary business districts (SBDs) — Central (Lower Parel, Elphinstone Road, etc.) and Bandra Kurla Complex (BKC) — at over 1 per cent. Average rents of the eastern suburbs’ sub-market as well as SBD North (Andheri) went up by about 1 per cent.
Thane saw about one per cent upswing. Central business district (CBD) rents saw another quarter of downward movement and declined 4 per cent, owing mainly to its limited supply of quality office space with modern infrastructure and amenities. Due to this reason, many existing occupiers wanting to refurbish their offices or expand in the same location have been facing severe limitations. Aged buildings and heritage regulations further hamper many occupiers’ refurbishment efforts.
Occupier profiles dictate their sub-market and asset-level preferences. While some occupiers compromise on building quality to continue in existing locations, others are open to moving to more ideal locations in the suburban micro-markets. Some other occupiers looking to expand within their most preferred location in the city may struggle with lack of relevant supply and, hence, move to Navi Mumbai or the suburbs.
Suburbs also prove to be attractive to most employees living in or around their office locations. Many back offices have preferred these locations over the years for these reasons. With infrastructure projects like the coastal road and metro rail promising to help, suburbs show promise of better connectivity in the medium-to-long term. If relevant supply comes up in these micro-markets, many more corporate occupiers may decide to move here.
The growing scarcity of carparks in some SBDs and transit woes in BKC may catalyse this movement. Another attraction behind suburban locations, which have evolved from BPO and industrial hubs into established back-office districts, is easy availability of talent. The biggest example being Navi Mumbai, which despite having seen the biggest hike in its average rental, has the most affordable rent among all micro-markets.
Popularly known as the ‘satellite city’, it has a growing footprint of grade-A, and superior grade-A, office developments. It also has an established information technology (IT) and banking, financial services and insurance (BFSI)-backend corridor. Moreover, it is quickly turning into a hub for captive services. Geographically, it offers good connectivity to both Mumbai and Pune apart from enjoying good access to talent pools from within and neighbouring suburbs. As it has good residential catchments, offices located in Navi Mumbai offer their employees with an additional perk of ‘walk-to-work’.
