The Central Business District of Nariman Point has for the first time been unseated from its position as the most expensive office space in the country. The mantle has now been taken over by the alternative business district of Bandra-Kurla Complex (BKC).
According to the 2012 first quarter data released by CB Richard Ellis (CBRE),per sq ft monthly rentals in BKC are in the range of Rs 250-300. For the same period,office space monthly rentals in Nariman Point have slumped to Rs 240-290 per sq ft. This is a far cry from the days of the real estate boom in 2007-08 when monthly rentals in the South Mumbai location were as high as Rs 450-500 per sq ft.
This is the culmination of the steady movement of corporate offices from South Mumbai to the more accessible locations in the suburbs,with BKC being considered the most attractive. Just last month,property consultants Cushman and Wakefield had released a report stating that for the first time in six years,Nariman Point has dropped out of the top 10 global commercial rentals ranking.
In the 90s,BKC which was created by the MMRDA to decongest Nariman Point started as a remote location where few wanted to shift. However,over the past several years,it has attained a critical mass and now houses offices of several banking and financial institutions,diamond trade,corporates,insurance and consulting firms.
Over the past few months,investment firms and financial companies such as Lazard,Temasek and the Royal Bank of Scotland moved out of their Nariman Point offices and consolidated their operations in larger offices in BKC,while Kotak Mahindra is expected to follow suit soon. Nearby Kalina has seen firms such as JP Morgan taking up an entire building for centralising their operations. Over the first three moths of 2012,BKC has seen two major leasing transactions,such as the banking group Investec leasing 8,000 sq ft of space in Capital,and British Petroleum renting 7,500 sq ft in Maker Maxity.
BKC with its larger floor plates,more availability of office space and easy accessibility is clearly evolving into the new commercial business district of Mumbai. But despite the space constraint and costs,Nariman Point will always be preferred by many, said Anshuman Magazine,CBRE chairman and managing director (South Asia).
He said the decline of Nariman Point,with its more than 30-year-old buildings and smaller office spaces,started as corporates gradually relocated further north to less expensive and larger offices in Worli,Lower Parel,BKC,Andheri and Powai. In the first quarter of 2012,Nariman point has seen a marginal absorption of 10,000 sq ft compared to BKC,where 35,000 sq ft was taken up in the same period.