General Mills inks 2nd largest front-office lease deal in Mumbai

In one of the biggest front-office lease deals in Mumbai, US-based food major General Mills has renewed agreements for 184,120 square feet (sq ft) of office space in the Powai area of Mumbai for rents ranging from Rs 104 to Rs 110 a sq ft per month.

The firm, which makes Pillsbury packaged atta, has taken space in three buildings — Prudential House, Spectra and Venture — from Lake View Developers of Hiranandani Constructions.

The lease rents were in line with market rates in the Powai area, real estate experts said. Office rents hover around Rs 100 to Rs 120 per sq ft in Powai, a north-eastern suburb of Mumbai.

A General Mills spokesperson declined to share information on the deal. Niranjan Hiranandani, managing director of Hiranandani Constructions, said, “General Mills is our regular client and these arrangements are part of the extension of their leasing of space with us.” 

The deal is also significant as it comes after the Hiranandani group sold a major portion of its Powai commercial properties to Canadian investor Brookfield last year.

In India since 1996, General Mills, headquartered in Mumbai, has in recent years expanded into areas such as premium ice-creams with Häagen-Dazs, baking mixes with Betty Crocker, granola bars with Nature Valley and canned corn and vegetables with Green Giant. In 2014, the company acquired Pune-based Parampara Foods ready-to-cook spice and sauce mixes with plans to ramp up its presence further in packaged food. 

Getting into one of the largest front-office lease deals in Mumbai therefore, should be viewed through the prism of its expansion plans in the country, sector analysts said.  

Recently, WeWork, an American co-working company, took 190,000-sq ft office space in Bandra Kurla Complex from financial services firm Enam at a rent of Rs 230 per sq ft. Late last year, pharma major Abbott took 160,000 sq ft in the Andheri area of Mumbai for Rs 120 per sq ft.

Raja Seetharaman, director at commercial property data analytics firm Propstack, said firms were looking to consolidate their office spaces, reducing space requirements and relocating to micro markets with lower rentals. “They are clearly preparing for a challenging period over the next few quarters. Landlords are focusing on holding on to their tenants by not enforcing or negotiating pre-decided terms like escalation, lock-in period and so on,” Seetharaman said. He added there was a clear trend of rentals under pressure in most micro markets while the preferred micro markets are holding on to current levels despite a demand surge.

According to global realty consultant CBRE, office rents have remained stagnant in most office hubs of Mumbai since Q4 of 2014.