Tata Consultancy Services (TCS), a USD 15.5 billion revenue generating software services exporter, shall take on rent over 2 million sq ft of built-to-suit office space at Hiranandani Estate in Thane, near Mumbai, among the largest single office space transactions in India.
Persons familiar with the development stated that the deal with Hiranandani Constructions shall be for 15 years with a renewal clause to kick in every three years. Further, TCS will also hold first right of refusal (FRR) or a soft option to extend the lease by another 2 million sq ft.
Niranjan Hiranandani, managing director of Hiranandani Constructions, said: “Our client’s confidentiality prevents us from making any comments in this regard.” TCS did not answer the email till press time on Thursday.
Flipkart, an e-commerce major, had earlier leased a custom-built office campus of a similar area, in Bengaluru, to be delivered in two phases. However, Hiranandani, will be handing over, within two years, the office space to TCS in a single phase.
“The space will be utilised for consolidation as well as expansion plans. The talks have been on since the last two quarters and are now leading to a conclusion,” said one of the persons cited earlier.
TCS has its head office, 18 other offices and 10 delivery centres in Mumbai and its surrounding areas. The new facility will accommodate around 30,000 staff members will cost the company monthly lease rental of between Rs.50/- to Rs.55/- per sq ft, annual rental charges being in the range of Rs.120 crores to Rs. 132 crores.
The deal is seen as an harbinger of good times in the commercial real estate market. Total corporate office space take up across seven key cities in the second quarter of the year stood at more than 8 million sq ft, a rise of nearly 70% quarter-on-quarter, according to a report.
Mumbai led the recovery in office space utilisation, recording over 2.93 million sq ft of office space absorption in the April-June quarter, according to another report, which said the regained trust of multinational corporations helped in breaking the monotony of low absorption since January-March 2013.
Occupiers from the BFSI & IT ITeS sector took over 1.91 million sq ft, followed by manufacturing & pharmaceuticals at 0.61 million sq ft and media and entertainment at 0.20 million sq ft, the report showed.
In a major policy change, the Maharashtra government recently came out with a revision of the 2009 IT-ITeS policy that is aimed at making the state an animation and gaming industry hub. The policy offers incentives like increase in floor space index (FSI) and waiver of stamp duty with an aim to attract Rs 50,000 crore of investment and Rs 1 million new jobs that are likely to be created in the next five years. With clarity coming over IT-ITeS policy this quarter, absorption is likely to improve this quarter, absorption is likely to improve.