At a time when land became a rare and expensive commodity in the main island of Mumbai, several leading developers went ahead to purchase land in nearby Thane where its prices were much lower.
With many of these leading developers having land banks here, they are now looking to launch new projects - both commercial and residential. Moreover, Thane boasts of good social and physical infrastructure facilities with easy connectivity to major areas in Mumbai via the Eastern Express Highway and Ghodbunder Road. In fact, Metro Line 4 from Wadala to Kasarvadavli-Gaimukh, being constructed by the MMRDA, will further connect Thane with Mumbai. Most recently, the proposal for an internal metro which will connect various parts of the city to this metro line has been given the green signal.
All in all, the metro when operational will boost connectivity between Thane and other major areas of Mumbai. Given that office rentals are fairly cheaper in Thane than the financial capital, many offices would consider Thane as a viable option. Moreover, amid altering consumer preferences where peripheral areas are being preffered by home buyers, going forward, we may see few large occupiers de-centralize and come in proximity to these residential spaces in the peripheries for their employees. After all, the trend of workspace near homes has gained prominence post the pandemic.
COMMERCIAL MARKET TRENDS
As per ANAROCK Research, out of the total net absorption of nearly 2.26M sq.ft of space in entire MMR in FY2021, Thane witnessed total absorption of nearly 0.38M sq.ft - i.e. over 17% total share. If we look back in FY2019, out of the net absorption of 5.7M sq.ft space in entire MMR, Thane comprised just 7% share with nearly 0.4M sq.ft absorption out of the total 5.7M sq.ft absorbed in entire MMR.
This rise in net absorption share clearly indicates the growing preference of companies. Moreover, it also somewhat resonates with the trend of offices shifting closer to residential catchments such as in Thane.
In terms of new completions, data indicates that Thane comprises nearly 5% of the overall supply in entire MMR in both fiscal years - FY 2021 and FY 2019. Of total new completions of 5.4M sq.ft in MMR in FY21, Thane added 0.25M sq.ft office space while back in FY 2019 of the total 2.88M sq.ft office space added in MMR, the city saw 0.15M sq.ft supply.
Considering the opportunity amid a slew of mega infra projects, several corporates and MNCs from sectors sich as IT/ITes pharma, BFSI, R&D, logistics etc. are also now looking to consolidate and come closer to their employees. Resultantly, there are various commercial projects in the pipeline in Thane including the development of a 2.6M sq.ft commercial space by a leading developer (Hiranandani). The project is expected to be ready by 2022-end.
AFFORDABLE OFFICE RENTALS
One of the major factors attracting companies to Thane are the prevailing affordable office rentals. ANAROCK Research indicates that average monthly office rentals stood at approx. INR 67 per sq.ft in Thane in FY 2021 and was INR 65 per sq.ft in FY2019 - thus growing by 3% between the two years. In a major contrast, office rentals in both CBD and SBD (BKC) areas in Mumbai stood anywhere between INR 200-300 per sq.ft in FY 2021.
Considering the fact that several companies are diligently trying to minimise their overall costs (of which real estate has the maximum share), it makes perfect sense for companies including corporates , start-ups etc. in shifting their base to Thane. The IT sector in Thane has already started developing and is set to flourish in the future with various upcoming IT park projects lined up for future development. This will play a major role in future growth of the city.
Santhosh Kumar,
Vice Chairman - ANAROCK Group
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