According to a latest report by JLL, Mumbai's office space is set to expand significantly in the near future. By 2025, the city is expected to add approximately 21 million square feet of new Grade A office space. This increase will bring the total stock up to over 169 million square feet, marking a 14% rise.
The growth in supply will primarily occur in three markets: Navi Mumbai, Andheri, and Thane. These areas are expected to add 5 million, 4 million, and 3.5 million square feet of office space, respectively.
The report suggests that investors should avoid markets like Thane and Navi Mumbai only if prices are significantly attractive or there is a wide lock-in period on the lease.
The report advised against the non-institutional areas in suburbs like Andheri that have less growth. The report also recommended purchasing larger floors, as the already high capital values may limit value generation potential.
As of the first half of 2023, Mumbai's office market had a vacancy rate of 14%, slightly below the national average of 16%. Both institutional markets like Goregaon/Malad and core markets like BKC, Fort, and Powai showed comfortable vacancy rates below 10%.
The city's nine major micro-markets include BKC, Nariman Point/Fort, Andheri, Lower Parel, Navi Mumbai, Thane, Powai, BKC Fringe, and Goregaon/Malad. Until 2022, Mumbai's annual supply was approximately 4.8 million square feet. A similar supply level is anticipated over the next three years.
The city's total vacancy rate was steady at 14%, despite a 22 million-square-foot supply addition between 2019 and 2022. The anticipated new supply of 21 million square feet by the end of 2025 is expected to maintain this vacancy rate.
The addition in 2021 was perceived as a COVID-19 overflow. The Western Suburbs, which include Andheri, Powai, and Goregaon/Malad, are predicted to account for 44% of the 12.4 million sq ft total supply that is anticipated to hit the market by 2025, while Navi Mumbai and Thane will account for 46%.
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