Mumbai's Office Market Sees Dip in Rental Values, Shift Towards Peripheral Locations
Mumbai experienced a slight decline in rental values during the third quarter of this year, accompanied by slower leasing activity. According to CBRE’s India Office Market View Q3 report, smaller markets like Lower Parel, Thane, and Navi Mumbai emerged as preferred locations for leasing activity, demonstrating significant traction.
Rental Values and Vacancy Rates
Rental values decreased by 2-3%, while vacancy rates held steady at an estimated 6-7% in the city. Central business districts such as Nariman Point, Fort, and Cuffe Parade were most affected, experiencing reduced transaction activity due to a noticeable shift towards locations on the periphery during the third quarter.
Decline in Commercial Leasing in Key Business Districts
Business districts including the Bandra-Kurla Complex, Kalina, and Kurla (West) witnessed a decline in commercial leasing activity. Approximately 0.10 million sq ft of space was occupied during the quarter, a decrease from previous quarters’ figures.
Lower Parel Sees Strong Demand
Lower Parel's business centers experienced substantial demand from corporate entities. On the supply side, about 0.26 million sq ft of new IT space was taken up. Rental values in the area’s commercial developments remained unchanged due to the ample availability of office space. In contrast, smaller markets like Worli and Prabhadevi recorded minimal leasing activity.
Thane and Navi Mumbai Attract Businesses with Cost-Effective Locations
Thane and Navi Mumbai, while smaller markets, witnessed strong demand for office spaces. Businesses increasingly shifted their focus towards these locations to reduce operating costs. Absorption in these areas reached approximately 0.33 million sq ft, compared to 0.20 million sq ft in the previous quarter.