In May, UK-based banking major Barclays leased 180,000 sq ft of space at Nirlon Knowledge Park in Goregaon area of Mumbai for its back-end operations. The deal was stuck at a monthly rental of about Rs 1.8 crore or Rs 95 a sq ft a month.
In doing so, Barclays joined the club of other multinationals such as Deutsche Bank, Morgan Stanley, Citigroup, etc that have back offices in the IT Park promoted by BSE-listed Nirlon Ltd.
In fact, German banking major Deutsche Bank also moved its back offices to Nirlon a couple of years ago from Peninsula Corporate Park in Lower Parel to Nirlon. Currently, Deutsche houses four of its offices in Nirlon.
The rush is palpable. Office complexes such as Nirlon, Lighthall-B, and Nesco IT Park, have benefited the most from the record absorption that has taken place in the Andheri-Goregaon belt in 2013. Nearly half of the 1.35-million sq ft absorption that took place in the Andheri-Goregaon business district in the first six months of this year was because of the three projects, according to a realty consultant.
The Andheri-Goregaon belt saw yearly absorption of 1.3-1.4 million sq ft of office space between 2010 and 2012, according to Cushman & Wakefield. This was the highest among the city's business districts such as Nariman Point, Bandra Kurla Complex, and others. The only exception was year 2012, when absorption in Lower Parel-Worli was at 1.75 million sq ft.
According to consultants, Andheri-Goregaon is also likely to beat others in office absorption this year as well.
The major beneficiaries of the absorption in Lower Parel and Worli in 2012 were Indiabulls Finance Centre and Indiabulls One Centre, which saw a combined absorption of 600,000 sq ft and Peninsula Business Park in Lower Parel, which saw similar absorption last year.
Nirlon is built on a factory land owned by a textile and conveyor belts maker, spread over a 23-acre plot. It has total constructed space of 1.6 million sq ft in phase I and II. Nirlon is building another 500,000 sq ft and 700,000 sq ft in phase III and IV, respectively.
Lighthall B is a joint venture project between Ekta Kapoor's Balaji and Hiranandani Constructions and has two towers of 700,000 sq ft. Hiranandani and Balaji honchos could not be contacted for comments.
Nesco looks to lease 350,000 sq ft of office space this year, said Sushil Shah, vice-president (strategy) at Nesco Ltd, which is primarily into capital goods.
Nesco has 800,000 sq ft of space in phase I, which is completed, and the company is building 1.4 million sq ft and 1.8 million sq ft of additional buildings in the projects in phase II and III, respectively.
Although Shah refused to name his clients citing confidentiality pacts, consultants said UK banking major HSBC and consulting and auditing major KPMG signed lease deals in the project.
Lower lease rents, better space efficiencies, close proximity to railway stations, highways, and residential hubs are among the reasons why tenants opt for these complexes.
According to consultants, Nirlon and Nesco charge between Rs 85 and Rs 95 a sq ft to IT and ITeS clients, and between Rs 95 and Rs 110 for tenants from other sectors. The reason for the difference is that property taxes at IT complexes are Rs 8-10 lower than at other office projects.
"There is a good demand for IT parks in these areas because of rents and proximity to residential hubs. IT cannot go to Nariman Point and Lower Parel where rents hover between Rs 150 and Rs 250 a sq ft," said Sanjay Dutt, managing director, South Asia at Cushman & Wakefield.
While A-grade buildings at Nariman Point, the central business district, command rentals of Rs 275 a sq ft, those in Worli get around Rs 240, Rs 140-150 in Lower Parel and Rs 280 a sq ft in Bandra-Kurla.
The other attraction is the higher built-up-to-carpet-area ratio, which gives tenants higher space, compared to what they actually leased. Consultants say this ratio is 75 to 80 per cent in Andheri-Goregaon buildings, compared with 60 per cent in Lower Parel or Worli buildings.
"If a firm moves from Lower Parel to suburbs like Goregaon, it can save at least Rs 40-60 a sq ft every month. That translates into significant savings for it over a nine-year period," said Raja Seetharaman, managing director of Aperon Realty, a property consultant.
The Proximity of Nirlon and Nesco IT parks to Western Express Highway and suburban railway stations has also helped the complexes to attract tenants, said consultants and companies.
According to Nirlon's annual report, it earned licence fees of Rs 8.46 crore a month as on March 31, 2012, and additional fee of Rs 1.32 crore a month from exiting old buildings in Nirlon. Earlier, the company management said it was expecting income of around Rs 80 crore from Nirlon from FY13.
Nesco earned an income of Rs 26.71 crore in FY12, compared to Rs 33.73 crore from its IT park due to slowdown in global and Indian economies, the company said in its annual report.
