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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This Watson Pharma – L & T Seawoods lease deal of Rs 95 per sqft per month on Built-up area or equivalent of Rs 140 per sqft per month on carpet area is highest rent achieved by any commercial office space above 30,000 sqft in Navi Mumbai. At prevailing capital values in L & T Seawoods Grand Central, this deal marks cap-rate of approx. 8.4%. Other recent sale and lease transactions indicate current cap rates in range of 8.4-8.9% at L & T Seawoods Grand Central. We are amazed at these low cap-rates for Navi Mumbai and we attribute the same to three reasons 1) L & T Seawoods is a ready (OC Received) Grade A building with superior amenities; 2) The tenant is from Pharma sector that have the capacity to absorb higher than average rentals and 3) Brand L & T and the property’s location. Our analysis shows Grade A buildings in prime micro-markets of Navi Mumbai such as Vashi are currently trading at passing rents averaging at Rs 75 per sqft per month and prevailing capital values are translating to cap-rates range of 9.0-9.2%.
Also, our analysis shows that L & T in Navi Mumbai has achieved rentals equal to micro-markets of Marol & Saki Naka in Andheri East currently trading at Rs 90-95 per sqft per month on built-up area.
Recent large lease transactions in Navi Mumbai are:
|Building||Tenant||Area (sqft)||Rent (INR sqft)|
|L & T Seawoods Grand Central||Watson Pharma||1,33,000||95|
Source: CRE Matrix