Goldman Sachs has taken the two-storey Rationale House at Prabhadevi for a record monthly rental of over Rs350 psf.
MUMBAI: The buoyant demand for and restricted supply of office space in the city are pushing rents to new highs. Goldman Sachs, an international investment bank, has secured approximately 45,000 sq feet of space, taking the two-storey Rationale House at Prabhadevi for a record monthly rental of over Rs350 per sq ft (psf). Another investment bank has taken an equivalent space at Worli at almost the same rental level.
Real estate experts say office rentals along the micro-market of Worli-Prabhadevi have never been higher. “Even during the rental boom of 1995, the highest rent an office premise fetched was Rs225-235 psf at Lloyds Centre,” said Sanjay Dutt, deputy managing director of real estate consultants Cushman and Wakefield.
“The reason for the development is simple,” Dutt said. “There is a gap of Grade A office space on this stretch. Rentals were hit by the late development of textile-mill land. Most developers focused on retail and residential properties.”
Dutt said the trend drove investment banks - the most aggressive of corporate houses and insurance companies looking for office space in south and central Mumbai — to acquire space by offering very high rentals.
An estimated 8 to 10 million sq ft of office space is expected to be available here in about two years.
As for the Goldman Sachs deal, Arif Fazlani, managing director of Sopariwala Exports, which owns Rationale House, said his firm is still negotiating with the bank. “No lease agreement has been signed,” Fazlani said.
While real estate experts believe deals like Goldman Sachs are rare, high rentals are driving sentiments along the stretch. And landowners are demanding a value equivalent to the reported Rationale House rental for their premises. According to a recent market review of Indian office space prepared by CB Richard Ellis, rentals have almost tripled in the past three years in this location due to limited supply of Grade A space. “The extended business district of central Mumbai remains the preferred alternate to the CBD for financial institutions,” the report said.
Institutions that have recently leased office space in this area for high rents include APL Shipping (approximately 33,000 sq ft) at Trade Plaza, Prabhadevi; German Infrastructure Bank (2,100) at Ceejay House, Worli; and Armstrong (8,000) in Marathon Nextgen, Lower Parel.
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