Nariman Point has always been the quintessential commercial hub for Mumbai. One can attribute this to the nature of the city, which was dependent on its port for its economy. Over time, Nariman Point became Mumbai’s primary commercial real estate nexus – and it still represents a fair share of Mumbai’s economy.
A large number of companies operating in India have their head office in and around Nariman Point. In fact, Nariman Point would have thrived even further had it not been flanked by water on all three sides. With no scope of expansion, most corporates were eventually prevailed upon to launch distributed offices in various other parts of the city.
The Government eventually recognized the need to decongest Nariman Point and proposed alternative Central Business Districts (CBDs). The primary among these was Bandra Kurla Complex (BKC), which had an edge over other proposed sites because of its strategic location between the airport and Nariman Point.
The development of BKC resulted in the opening up of some space at Nariman Point for a short while – a gap which closed up quickly because of the constant demand among for a high-profile corporate address.
Today, while Nariman Point retains its historic significance for corporates and the finance sector, the rest of South Mumbai is now also back in vogue as the preferred launch pad for any international corporate entering India for the first time.
It is now becoming evident that there is a trend of companies preferring to relocate from Nariman Point due to the high rentals and lack of clarity on the property tax structure that come with the location.
In the current scenario, overall costs in other parts of South Mumbai are proving to be less prohibitive than at Nariman Point and other front office micro markets such as BKC. Moreover, quite a few buildings in this high-profile catchment have commenced refurbishment, and this will lead to a significant Grade ‘A’ supply.
The demand for front office real estate is beginning to revive in South Mumbai at a time when other front office micro markets are losing out on the basis of infrastructure shortfall.
While Nariman Point may not be the location of choice anymore, most companies still prefer to have their corporate headquarters in South Mumbai due to the proximity of the Reserve Bank of India (RBI), Bombay Stocks Exchange (BSE), Securities and Exchange Board of India (SEBI), the political legal fraternities as well as 5 star hotels.
A South Mumbai location is particularly of enormous interest to most BFSI (Banking & Financial Services Industries) companies.
In fact, the office space market in South Mumbai has seen some interesting developments after the recent slowdown, which forced most companies to relocate/consolidate all services into a single building or split front and back office functions in South Mumbai and suburbs respectively in order to rationalize real estate costs.
Recently, at Churchgate, Hindustan Unilever (HUL) has decided to relocate to their campus at Andheri (E). Considering the demand for quality office space in south Mumbai, the company has decided to lease their Churchgate property out as a refurbished building instead of selling it.
This is a prudent decision, since doing so allows HUL to unlock the value of this asset in the medium-to-long term. Further, it ensures the company’s inherent association with the building. Jones Lang LaSalle has been appointed as exclusive advisors for the leasing process as well as for project development services during the refurbishment.
There are significant advantages to companies who choose to lease into this property. HUL, being a single corporate owner, is able to offer considerable clarity on a lease agreement, and to absorb a significant portion of the property tax exposure.
As a Ground floor plus seven floor structure with an area of approximately 154,320 square feet, the HUL building is the single-largest ‘A’ grade building in South Mumbai.
The currently ongoing renovation process, which will bring this building’s facilities on par with those of modern buildings in this location, will be completed by April 2010. Post completion, the building will offer the unique advantages of an iconic heritage structure bulwarked by modern infrastructure, translating into a pleasant and secure working environment.