Andheri, Goregaon pip BKC, Parel as most favoured office locations in Mumbai

[caption id=“attachment_836251” align=“alignleft” width=“380”] Reuters[/caption]

Mumbai’s western suburbs like Andheri and Goregaon have given the island city’s established business hubs, such as Nariman Point, Bandra-Kurla Complex and Lower Parel-Worli a run for their money when it comes to absorption in office space as rentals in the suburbs are at least 30 percent cheaper than that of BKC and Parel area.

According to a report by real estate research firm Knight Frank bulk of office space transactions during the fourth quarter of financial year 2013, took place in the suburban business districts of Andheri and Goregaon.

[caption id=“attachment_836197” align=“alignright” width=“351”] Source:Knight Frank[/caption]

“Andheri East and Goregaon East accounted for a massive 92% of the transactions inthis market as BFSI, media and consulting companies like Axis Bank and UTV Disneyamong others set up shop here,” the report said.

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Central Mumbai, comprising of Lower Parel, Parel, Dadar and Prabhadevi, on the other hand, witnessed a weak quarter and claimed only 29 percent of the total transaction pie as corporates have been looking to reduce their real estate cost footprint by taking up premium office spaces in the suburbs, the report added.

“The central suburbs almost halved their market share in Q4 FY 2013 as occupiers

perceived better value in office properties located in SBD West locations like Andheri and Goregaon,” said Dr Samantak Das Chief Economist & Director, Research.

[caption id=“attachment_836095” align=“alignleft” width=“545”] Select transactions in the Mumbai Office Market. Source: Knight Frank[/caption]

Another report by real estate research firm Cushman and Wakefield validates this shift.

“Andheri-Goregaon has over the past three years seen absorption of 1.3 million to 1.4 million sq ft of office space annually - the highest among all business districts in Mumbai,” as corporates move to this secondary business district due to lower rentals, better efficiency in spaces and proximity to airport and residential hubs, the Business Standard reported today, citing the Cushman and Wakefield report.

Many corporates in the recent past have shifted to these suburbs in search of a bigger and better workplace. Hindustan Unilever (HUL), Procter & Gamble (P&G) and Marico and advertising and media agencies such as Ogilvy & Mather (O&M), GroupM and DDB Mudra are a few such corporates that moved to the north-western suburb.

A-grade buildings at Nariman Point command rentals of Rs 275 per sq ft, those in Worli get around Rs 240, in Lower Parel around Rs 140-150 and Bandra-Kurla Rs 280 per sq ft, while rentals in Andheri-Goregaon hover between Rs 90 and Rs 110 per sq ft, the report added.

Knight Frank t expects a rental growth of 28 percent between 2012 and 2017 in the Andheri and Goregaon area.

“We see the Central Mumbai is the top followed by the secondary business district of Western Mumbai, SBD West we are calling it which includes Goregaon, Malad and Andheri markets. However, in Mumbai the third is BKC, " saysSamantak Das, National Head,Research, Knight Frank India.