Global pharmaceutical major Teva’s arm Watson Pharma had rented 105,000 sq ft of office space in L&T Realty’s office complex in Navi Mumbai, said sources in the know. Watson Pharma would pay over Rs 12 crore annual rent, or Rs 95 per sq ft per month on built-up area or Rs 140 on carpet area, said sources.
Parent Teva was also expected to rent an additional 28,000 sq ft built-up area in the same Tower 2, L&T Seawoods Grand Central, Navi Mumbai, sources said. With the total take-up of 133,000 sq ft, it is the second biggest office lease deal in the last three years.
Watson Pharma leased the space in the first week of September. The company had a 10-year lease term, sources said. It has negotiated a six-month rent-free period for fit-outs. The lock-in period for Watson Pharma is five years while the landlord is locked in for the entire lease term. The lease rent will go up by 18.7 per cent after 36 months.
When contacted, Shrikant Joshi, chief executive and managing director of L&T Realty, confirmed the development.
Last year, Teva leased 150,000 sq ft across five floors in Oberoi Commerz in the Goregaon area of Mumbai, making it one of the major leasing deals of the year. Teva was expected to move its India headquarters to the complex.
“At prevailing capital values in L&T Seawoods, this deal marks a cap-rate of around 8.4 per cent. We are amazed at these low cap-rates for Navi Mumbai and we attribute that to the reason that L&T Seawoods is a ready Grade A building with superior amenities; the tenant is from the pharmaceuticals sector, which has the capacity to absorb higher rentals; brand L&T; and the property’s location,” said Abhishek Tiwari, co-founder of CRE Matrix, a property data analytics firm.
Tiwari said Grade A buildings in prime micro-markets of Navi Mumbai such as Vashi were currently trading at passing rents averaging Rs 75 per sq ft per month and the prevailing capital values were translating into cap-rates of 9.0-9.2 per cent. “Also, our analysis shows that L&T in Navi Mumbai has achieved rentals equal to micro-markets of Marol and Saki Naka in Andheri East, currently trading at Rs 90-95 per sq ft per month on built-up area,” he said.
Navi Mumbai recorded the highest annual rental growth of 8 per cent among Mumbai’s micro markets in the last 12 months, said JLL in a note on Thursday. The gross average rental in Mumbai rose by only 0.5 per cent, year on year, in April-June.