MUMBAI: Mumbai witnessed sluggish commercial leasing activity during the third quarter of 2013. The micro markets of Lower Parel, Thane and Navi Mumbai witnessed high traction and were the preferred regions for office space leasing. Rental values in Mumbai remained largely stable with marginal dip in the central business district (CBD) and alternative business district (ABD) locations, according to the findings of CBRE’s latest report, India Office Market View Q3 2013.
The CBD of Nariman Point, Fort and Cuffe Parade witnessed limited transaction activity owing to a shift in occupier interest towards peripheral locations. The overall sluggishness in transaction activity continued to impact asset pricing negatively, with rental values registering a quarter-on-quarter (q-o-q) decline of 2-3 per cent. Vacancy remained largely stable, at an estimated range of 6-7 per cent.
The ABD of Bandra-Kurla Complex (BKC), Kalina and Kurla (W) observed a decline in commercial leasing activity during this quarter. Around 0.10 million sq ft was absorbed in the present quarter, compared to around 0.16 million sq ft in the preceding quarter.
The extended business district (EBD) of Lower Parel observed strong demand for large format office spaces by corporate occupiers. On the supply front, around 0.26 million sq ft of fresh IT space became available for leasing during this period. While rental values maintained stability in the IT segment, values appreciated by around 6-7 per cent q-o-q in select commercial developments — largely due to limited availability of commercial office space. On the other hand, commercial leasing activity in the micro-markets of Worli and Prabhadevi remained low.
Commenting on the findings of the report, Anshuman Magazine, chairman and managing director of CBRE South Asia, said: “Occupiers are likely to remain cautious in the short- to medium-term, with their focus expected to remain firmly on consolidating their portfolio. Demand is likely to be concentrated mostly in the peripheral region, owing to the availability of cost-effective Grade A office spaces. Along with financial and pharmaceutical majors, demand is expected to gather momentum from engineering, manufacturing and FMCG (fast moving consumer goods) companies looking to expand their footprint in the city. Due to the large anticipated supply addition in upcoming quarters, rental and capital values are likely to remain under pressure in most micro-markets in the short- to medium-term.”
The peripheral micro-markets of Thane and Navi Mumbai observed strong demand for office space as occupiers continued shifting focus towards these cost-effective locations. Absorption was recorded at around 0.33 million sq ft, compared to about 0.20 million sq ft in the previous quarter. Owing to healthy absorption levels, vacancy declined marginally to settle at an estimated range of 10-11 per cent. Malad and Goregaon, however, witnessed subdued transaction activity, with absorption of 83,000 sq ft in the current quarter over 0.51 million sq ft in the previous quarter.