L&T Seawoods rents out 52,391 sqft to Fleet Management for record rent of Rs 95 per sqft per month in August 2017…

Fleet Management has taken 52,391 sqft built-up area in L&T Seawoods Grand Central, Navi Mumbai in first week of August 2017. Fleet Management will be paying Rs95 per sqft per month at an annual pay-out of Rs 6 crore to the landlord, L&T Seawoods for 5 year lease term. The lock-in period for tenant is 3 years while the landlord is locked in for the entire 5 year lease term. Additionally, tenant has to pay 8 months security deposit with additional tranche of security deposit at time of rental escalation after 36 months to match the prevailing rental. Tenant will be facing escalation of 15% after 36 months. Tenant gets 34 parking lots which would be approx. 1 car park per 1500 sqft.

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Watson Pharma leases 1.05 lakhs sqft in L & T Seawoods Grand Central, Navi Mumbai at record rent of Rs 95 per sqft per month. Fleet Management also leased 52,391 sqft in same building at 95 Rs per sqft per month in Aug 2017

Watson Pharma has leased 1,05,397 sqft built-up area in L & T Seawoods Grand Central, Tower 2, Navi Mumbai in first week of September 2017. Watson Pharma will be paying Rs 95 per sqft per month at an annual pay-out of Rs 12 crore to the landlord, L & T Seawoods for 10-year lease term. The tenant has negotiated 6-month rent free period for fit-outs. The lock-in period for tenant is 5 years while the landlord is locked in for the entire lease term. Additionally, tenant has to pay 6 months security deposit with additional tranches of security deposits at time of rental escalations to match the prevailing rental. Tenant will be facing escalation of 18.7% after 36 months. Further, Watson Pharma’s parent Teva is expected to rent an additional space of around 28,000 sqft built-up area in the same tower.

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Office market opens up to Toddlers!

Crèches / Day-care Centres open up across all major commercial centres in Mumbai…

As per the Maternity Benefits (Amendment) Act, 2017, every commercial office establishment having fifty or more employees shall be mandated to have a crèche facility / Day-care centre within such distance as may be prescribed, either separately or along with common facilities. Further notifications on distance, location etc. of such day care centres are expected soon.

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Co-Working spaces on the rise in BKC, Mumbai.

After Wework, Quest Office, Awfis leases 24k sqft in BKC at MG or 42% revenue share.

Awfis, a co-working office space provider leased 23,648 sqft in Crescenzo, a commercial office building in Bandra Kurla Complex in 1 st week of August 2017. Awfis will be paying higher of minimum guaranteed initial rent of Rs 125 per sqft per month or 42% revenue share to the landlord DKJ Shelters. IDFC was the previous occupant at the said premises. Awfis negotiated 3 months’ rent-free period in the 60 months lease term to complete fit-outs in the leased premises at its own expense. The lease rent will increase by 9.6% to Rs 137 per sqft per month after 1 year. Additionally, the tenant has to pay common area maintenance charges which are currently estimated at Rs 10 per sqft.

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Commercial Office market continues to remain an “Occupier Market” as occupiers renegotiate rentals downwards. Deutsche Bank generates Annual Savings of INR 5 crore in rentals by renegotiating its current lease downwards in BKC…

Deutsche Bank’s CRE team has renegotiated its lease rental for its corporate front office of 90,000 sqft at a premium grade A commercial building in Bandra-Kurla Complex (BKC) by 15% from INR 306 per sqft per month to INR 265 per sqft per month. Deutsche Bank executed an addendum agreement on March 31, 2017. Deutsche Bank’s previous agreement commenced in year 2012 at initial rent of INR 278 per sqft per month with lock-in period until March 2018. The current rental was INR 306 per sqft (post its first escalation of 10%). Although the contracted rental has been reduced by 15%, the lock-in period has been extended until March 2022 from the existing lock-in period until March 2018 benefiting for the Landlord in terms of assured tenancy by Grade A occupier.

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Mumbai’s CRE Market gathering steam… Zydus Healthcare buys Walia Business Park at Goregaon for INR 172 crores.

Zydus Healthcare bought the Walia Business Park at Goregaon East, Mumbai in fourth week of March 2017 for total pay-out of INR172 crores. The said property was lying vacant since last two and half years despite receipt of occupation certificate in Oct 2014 and was mortgaged to SBI in June 2015. The 2 basements + 2 podiums + ground + 10 floors building, admeasuring 79,832 sqft in carpet area is right on the Western Express Highway, Goregaon. The purchase price on carpet area is INR 21,545 per sqft and presuming building efficiency of 63%, the purchase price on chargeable area would be INR 13,570 per sqft.

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Netmagic signs a lease in perpetuity with Hiranandani and Balaji JV for INR 321 Crore in Mumbai, biggest in last 2 years

Netmagic has entered into an agreement in March 2017 with Hiranandani Group and Balaji Tele-Developers with total pay-out of INR 321 crores to develop a 2,86,691 sqft IT/ITeS building in Lighthall, Hiranandani Business Park, Chandivali, Mumbai. This transaction is a perpetuity lease at a one-time price of INR 11,198 per sqft with annual lease rent of INR 1.00 per sqft. Presuming 14% discount rate, the deals NPV would be at one-time price of INR 10,850 sqft as the total consideration of Rs 321 crores shall be made to the developers in a staggered manner over the next 13 months. We opine that Netmagic has negotiated a sweet deal primarily for two reasons: 1) they are investing in a building of their choice and specifications and 2) at a lower price as compared to the prevailing market capital values of INR 13,500 – 16,000 per sqft in and around Powai. The prevailing market capital values are derived using prevailing cap rates for fully leased commercial office assets of ~8.5 – 9.0% and current average rental values of INR 100-120 per sqft per month in and around Powai.

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Pre-Leased commercial space to stay in demand. BKC leads the pack. Yield compression of more than 15% in last 3 years and likely to continue….

ICICI Prudential has recently bought an entire floor of 60,000 sqft (chargeable area), a pre-leased commercial unit at Crescenzo building, BKC for INR 147 crore in February 2017. The leased property is currently occupied by Tata Communications at rent of INR 177 per sqft per month (on chargeable area). The buyer, ICICI Prudential, also receives proportionate undivided interest of 5.19% in the land.

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WeWork to open its first co-working office of 1.9lac SF with INR 4.3cr monthly payout in Mumbai at Bandra Kurla Complex

WeWork, the global co-working unicorn, that provides shared working spaces for freelancers, entrepreneurs, startups and small businesses, has just leased its first office space in Mumbai in the first week of January 2017. According to CB Insights, in the latest round of funding by Jinjiang International Group during October 2016, WeWork was valued at US$16.9 bn. Among its investors include global institutional investors such as JP Morgan Chase, Harvard Management Company, Goldman Sachs, Fidelity Investments, Wellington Management, Hartford Funds Management, Legend Holdings and Hony Capital.

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Zara expands in Mumbai – leases nearly 30k of premium ground floor space in Oberoi Mall

Garnering unprecedented success, Zara – the global apparel retailer, continues to expand its presence in India. In November 2016, it leased nearly 30k sq ft of carpet area on ground floor in the Oberoi Mall in Goregaon. The lease is structured in a way that Zara pays the higher of a minimum guaranteed rent of INR 100 psf per month on a carpet area basis or 9.5% of net sales (revenue share). In addition to the rent/revenue share, it is also bearing an additional INR 26 psf per month towards heating, ventilation and air-conditioning charges (or CAM charges) in Oberoi Mall.

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