As old office buildings age, tenants are showing an increasing preference for shifting to new-age office buildings coming up in newly developed business districts, according to JLL’s latest white paper titled Futureproofing Assets in an Evolving Market: Investors’ Perspective.

According to the white paper, a healthy rate of Grade-A office stock is being created every year in the country. At the same time, a significant share of office assets, created more than a decade back, are at the risk of becoming redundant.

In Mumbai, the quantum of existing Grade-A office stock that was completed 10 years ago (before 2008) stands at 28.8 million sq ft, which is 25 per cent of office stock universe in Mumbai currently. In terms of number of buildings, this universe is a whopping 40 per cent of the total universe in Mumbai.

Delhi-NCR has until now witnessed a similar trend, Bengaluru and Hyderabad are catching up on this trend as well, a JLL press statement added.

Decline in rentals

The study also indicates that tenants are moving from traditional Central Business Districts (CBDs) such as Connaught Place in Delhi and Nariman Point in Mumbai to emerging alternate new business districts in Gurgaon and Bandra Kurla Complex, respectively.

As a result, with rising vacancies, rentals across CBDs have been witnessing a decline. MV Harish, Managing Director, Project and Development Services, JLL India, said in a press statement, “The emergence of modern offices is taking occupiers to newly developed business districts and buildings, resulting in a price and occupancy drop in more central, prime markets.”

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