TCS takes 1.8mn sq ft office space on lease for Rs 110 cr in record deal

MUMBAI: Software services giant Tata Consultancy Services (TCS) has taken on lease 1.8 million sq ft at Hiranandani Estate, Thane, in what is described as one of the biggest office space deals in India. The annual lease rent is believed to be over Rs 110 crore. Early this year, Flipkart took on lease 2 million sq ft in Bengaluru in a custom-built office campus.
Hiranandani Group chairman Niranjan Hiranandani confirmed the transaction but did not reveal further details.The deal was brokered by global property consultant Knight Frank.
Sources familiar with the transaction said TCS has an option to lease another 1.1 million sq ft from Hiranandani in the same location. It would house around 25,000 employees in the two phases. “By size, this is the largest office space deal in the country,” said sources. The lease deal will be for 15 years. Construction work on the new “built-to-suit” commercial building is expected to commence soon and will be completed by 2017. The monthly lease rental is around Rs 50 per sq ft.
In a report released last month, Knight Frank said the Indian office space market has been maintaining the healthy traction of 2014 and has clocked transactions of 18 million sq ft in the first six months of 2015. “We expect the year to complete at around 40 million sq ft, which is the highest since 2011. This is a record year for Bengaluru which is expected to transact office space to the tune of around 12 million sq ft in 2015. Even though at an aggregate level, the vacancy is at 17% the challenge is to get good quality office spaces across prime business districts, wherein vacancy is in single digits,” it said.
Due to a robust demand from start-ups and e-commerce, other than IT/ITeS, BFSI and manufacturing, office rentals are experiencing a substantial surge. “Going forward, we foresee demand to continue outstripping supply,” it added.