Mumbai now India’s most expensive office market: Anarock report

Mumbairsquos commercial real estate is riding a high like never before The city has officially become the most expensive office market in India with rentals in the Mumbai Metropolitan Region MMR surging by 28 per cent between 2022 and 2025 mdash from Rs 131 to Rs 168 per sq ft mdash according to a new report by Anarock ResearchThis sharp rise is being fuelled by a cocktail of forces a postpandemic return to physical offices limited supply of new Grade A spaces rising demand for ESGcompliant workspaces and major Metro rail expansions that have redefined corporate connectivityFrom BKC to Goregaon and Lower Parel to Andheri the cityrsquos skyline is seeing not just taller buildings but steeper rents reshaping how India Inc works spends and grows in the countryrsquos financial capitalWhy are prices risingWith demand far outpacing supply companies are being forced to rework budgets and rethink locations According to JLL Mumbai added just 01 million sq ft of new office space in the first half of 2025 That follows limited growth in previous years 088 million 2020 169 million 2021 207 million 2022 251 million 2023 and 437 million in 2024ldquoThe hybridtooffice shift drove demand for modern ESGcompliant Grade A offices Companies like Brookfield Blackstone Deloitte and Amazon took up large spaces in BKC and Goregaon setting new benchmarksrdquo said Gorakh Jhunjhunwala managing director Meraqi AdvisorsAreas like Andheri Goregaon and Lower Parel have also gained traction among costconscious companies due to lower rentals and proximity to the airport said Peush Jain MD Commercial Leasing and Advisory Anarock GroupShift to flexible workspacesLandlords have been upgrading commercial properties to cater to the growing demand for flexible workspaces ldquoUpgrades like new lobbies more meeting rooms highspeed internet and enhanced security have pushed rentals higherrdquo said Jain He added that 54 per cent of MMRrsquos 142 million sq ft Grade A office stock is over 10 years old and if upgraded can command 15 to 20 per cent higher rents Most of this activity is seen in Andheri and Lower Parel among othersCoworking new pricing forceFlexible workspaces have had a twofold impact on commercial rent dynamics from 2020 to 2025 according to JhunjhunwalaIn noncore markets like Goregaon and Andheri WeWork and Awfis drove 15to 30 per cent of leasing in some parksPeush Jain MD commercial leasing and advisory Anarock GroupIn core markets BKC and Nariman Point demand pushed rentals to Rs 350 to Rs 500 per square footLower Parel saw coworking spaces absorb older buildings aiding startups and boosting enterprise upgradesLandlords mixing 10 to 20 per cent coworking into their spaces earned 15 to 20 per cent higher rents especially in BKC and AndheriGrade B assets lost out as tenants moved to flexible spaces widening the rent gapMetro The rent acceleratorldquoParel saw an eight per cent yearonyear rental increase due to the Coastal Road and Aqua Line completion Goregaon recorded a nine per cent increase post Metro Lines 2A and 7rdquo said Samantak Das chief economist JLL IndiaGorakh Jhunjhunwala MD Meraqi AdvisorsJhunjhunwala cited two specific examples1 Goregaon Metro Yellow Line 2A and Red Line 7After their launch in 2023 Goregaon East became more accessible Big companies like Morgan Stanley Deloitte and IDFC signed major leases As demand surged Grade A rents jumped 20ndash25 per cent from Rs 120ndash150sq ft in 2020 to Rs 160ndash200 by early 20252 BKC Metro Aqua Line 3 ColabaBKCSEEPZEven partial completion the BKCWorli phase in mid2024 boosted confidence Rents increased from Rs 250Rs 300 to Rs 320Rs 350sq ft mdash a 22ndash25 per cent riseWhat developers are sayingldquoOffice spaces have evolved to include diverse workstations fewer cabins and common areas to encourage collaborationrdquo said Ashish Narain Agarwal CEO PropertyPistolHowever rising rentals come with challenges ldquoHigh rents are pricing out startups and midsized businesses leading to unsold inventory in some big projectsrdquo he addedAmit Goenka chairman and MD Nisus Finance said developers are also battling rising construction costs labour shortages ESG compliance burdens and regulatory bottlenecks in premium locations like BKC and Lower Parel A supply pipeline is expected between 202728 but developers must focus on smart layouts and sustainability to retain tenantsJash Choraria VP Crest Ventures said that rising material and labour costs are impacting project viability but can be managed in the long term with quality developments