Mumbai Q4 gross absorption of lands rise over 5 pct
In Q4 2018, Mumbai recorded gross absorption of 2.1 million sq ft, registering an increase of 5.7% QoQ. Leasing activity was concentrated in the micromarkets of Andheri East (30%), Bandra-Kurla Complex-BKC (18%), LBS/Eastern Suburbs (16%), and Goregaon/JVLR (13%). The leasing activity was dominated by media and advertising occupiers, which accounted for nearly 22% of quarterly gross absorption, replacing flexible workspace operators as the top contributors to gross leasing after several quarters. The media segment was closely followed by BFSI occupiers representing 21% of quarterly gross absorption and flexible workspace operators accounting for 12%.
"Corporate real estate in Mumbai is moving to the next level. Institutionalised developers and owners of real estate are changing the playing field of the office market. It's clearly reflected in the occupancy levels of the recently signed co-working spaces and fast vanishing quality office supply in the City," says Sangram Tanwar, Senior Director, Office Services (Mumbai) at Colliers International India.
The growing need for workspace efficiency and a collaborative work environment increased demand for flexible workspaces in 2018. In 2018, flexible workspace operators accounted for 20% of gross absorption, second only to the BFSI sector which accounted for 25%. This represented a threefold increase from the level of 2017. The demand for flexible workspaces was mainly driven by increased demand from the IT industry, looking for ways to mitigate real estate costs and seeking flexible solutions.
Continuing with the trend in 2018, it's expected that the BFSI sector would drive leasing activity through H1 2019 due to steady enquiries by occupiers looking to consolidate their office spaces. For premium front-office space, BFSI occupiers should focus on BKC micromarket, while cost-sensitive occupiers should evaluate options in micromarkets such as Lower Parel and Andheri.
In Q4 2018, Mumbai witnessed a new supply of 1.03 million sq ft. This is only the second time that Mumbai has seen over 1.0 million sq ft of new supply, after Q2 2018. About 81% of the new supply was concentrated in the LBS Road/Eastern Suburbs micromarket, and the remaining in Navi Mumbai. These projects were completed later than scheduled; however, this should provide opportunities to occupiers looking for large contiguous floorplates in Grade A developments in these micromarkets.
(With inputs from agencies.)
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