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Air India is once again putting up some floors of its iconic sea-facing headquarters building in Nariman Point, Mumbai, for rent.
After the dull response to its first attempt at leasing 12 of the 23 floors (1,59,000 sq. ft) in its building in October last year, the debt-laden national carrier has now invited fresh bids, the second time in the last five months. The last attempt reportedly resulted in award of only four floors to State Bank of India after the airline extended the bid offer.
Gather revenues
The new round of bidding comes after the Board of Air India formally approved shifting of the airline’s headquarters from Mumbai to Airline House in New Delhi with immediate effect last month.
This is part of a larger exercise by the airline to monetise its real estate assets by renting, selling or re-developing its properties across the country to gather revenues of Rs 5,000 crore in the next 10 years.
In its latest offer, Air India has invited interest for leasing eight floors, putting a total of 1,15,518 sq ft of built-up area for rent for a lease period of nine years.
This period can be extended by three years at the sole discretion of Air India. However, to qualify for the financial bid, the company has added the condition that the bidders will have to quote for a minimum of one entire floor, including service core area in Tower Block, that is the 13th floor and above.
The floors on offer comprise ground floor, first floor, floors 13th to 16th and 19th and 20th.
Benchmark lease rent
The company has also given a benchmark lease rent for ground floor at Rs 350 a sq. ft. a month, 320 sq. ft. a month for first floor and Rs 310 a sq. ft. a month for the fourth floor tower block.
Interestingly, Air India is not keen on letting go of the longstanding signature identity of the building with its brand. Built in 1974, the building has since served as the airline’s headquarters. To retain its sanctity, it has not permitted any publicity materials, displays, hoardings, advertisement and logo of any kind inside or outside of the building by the new tenants.
They have, however, been allowed to display their company’s board at the office entrance and publicity items on the inner walls of the space leased to them.
Cheaper than rival
According to realty analysts, though the average monthly rent at Nariman Point in South Mumbai at Rs 180- 200 works out to be cheaper compared to the rival and newly emerging corporate office hub of Bandra Kurla Complex which commands rentals of Rs 220-275 per sq. ft., corporates still continue to prefer the latter.
Strategic location
Ashutosh Limaye, Head - Research and Real Estate Intelligence Services, Jones Lang La Salle, said: “Corporates prefer BKC owing to its strategic location near the airport and the suburbs where the majority of their staff stays.
“Moreover, being a well-planned commercial district it boasts better infrastructure and roads.”
New business district
Amit Bhagat, CEO and Managing Director, ASK Property Investment Advisors, said: “With BKC emerging as the new central business district, biggies such as Deutsche Bank, Standard Chartered Bank and JP Morgan have already relocated out of South Mumbai. Only smaller offices or boutique offices would be interested in staying there which is why the Air India building, despite being a marquee or trophy building, is hardly finding any takers. This is reflected in the airline’s repeated attempts to put it on lease.”
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