MUMBAI: International banking and financial services major BNP Paribas' India arm has renewed lease of over 53,000 sq ft at Maker Maxity in Mumbai's business district Bandra-Kurla Complex (BKC) at a record rental of Rs 540 per sq ft a month, said two persons with direct knowledge of the development. The deal assumes significance as this the highest rental paid by any tenant ever across India. Interestingly, BNP Paribas will be paying Rs 595 per sq ft for around 5,000 sq ft ground floor of this high-end commercial building along with the right to maintain its signage on the building moving the record further. The rental for ground floor equates to Rs 915 per sq ft on carpet basis.
The French banking group will be paying around Rs 155 crore for the 48,000 sq ft office space over the tenure of total five years. “BNP Paribas has renewed the lease for 48,000 sq ft office space on four floors from fifth to eighth. In addition to this, 5,000 sq ft on the ground floor has also been leased,” said one of the persons mentioned above. While the rentals agreed upon between both the parties have surprised the market, few of them are looking at the renewal deal as a one-off transaction as it also includes the signage rights. BNP Paribas declined to comment for the story, while ET’s email query to Reliance Industries remained unanswered until the time of going to press. Maker Maxity, jointly owned by Maker Group and a subsidiary of Reliance Industries, is known for highest commercial lease rentals across markets for long. Commercial property contracts at the complex sustained levels of Rs 400 to Rs 425 per sq ft a month over the last few years even when rentals for BKC commercial properties hovering around Rs 300 per sq ft. The commercial property has been housing several major financial institutions including global sovereign and pension funds. Office demand in suburban locations or secondary business districts is outpacing that in the central business districts across India’s major markets. Experts said the trend that began with Mumbai, with the shift in preference from Nariman Point to Bandra-Kurla Complex over the past few years, has moved to other cities as well and started reflecting in the rentals commanded by these locations. Sustained robust demand for office spaces has pushed leasing activity across the country in 2019 to a new record high. The demand is expected to remain strong in 2020 with occupiers rising preference for pre-leasing commercial real estate to future-proof their portfolios and hedge against rental escalations. India’s commercial space absorption hit new high of over 60 million sq ft in 2019, showed two independent data reports. Gross office leasing volumes pan-India touched a 69.4 million sq ft in 2019, compared to 49.5 million sq ft a year ago, according to Cushman & Wakefield. Gross leasing activity, according to CBRE South Asia, grew more than 25% from a year ago to touch a historic-high of 61.6 million sq. ft. Record breaking pre-leasing activity was recorded during the year; vacancy levels stayed low despite robust supply and rentals continues to rise owing to strong growth momentum.
March 06, 2020