The deal is for 15 years, including a 10-year fixed term and an option to avail an extension for the balance period, the people cited earlier told ET, requesting not to be named
MUMBAI: Global investment bank Morgan Stanley is picking up nearly 800,000 sq ft of commercial space in Oberoi Realty’s Commerz project in Goregaon suburb of Mumbai, people aware of the development said, in what is being billed as one of the largest built-to-suit office space deals in the country.
The deal is for 15 years, including a 10-year fixed term and an option to avail an extension for the balance period, the people cited earlier told ET, requesting not to be named. The lease rental for the space is set at Rs 120 per sq ft, taking the annual lease amount to over Rs 115 crore per year, a record, they added.
For the fixed term of 10 years, the rental outgo is estimated to be more than Rs 1,150 crore. The agreement also has a rental reset clause which will kick in every three years with 10% upward revision, the sources said.
The deal assumes significance not only for the size but also because Morgan Stanley has pre-committed to the under-construction office space as against the usual practice of leasing ready properties.
“Morgan Stanley is planning to consolidate its back office operations at one location here in this office space spread over 8 floors out of 40-storey upcoming tower,” said one of the persons mentioned earlier.
Morgan Stanley declined to comment on the matter. An email query to Oberoi Realty remained unanswered till the time of going to press.
The commercial tower is expected to be completed within the next two years and Morgan Stanley will start operating from this office in 2023, the sources said, adding that the developer will be providing exclusive entry and exit points to this office.
The financial services major’s India head office is located in One Indiabulls Centre in central Mumbai’s Prabhadevi, while its three back offices are in Goregaon suburb. Morgan Stanley, which has been in India for 25 years, has over 4,000 employees across five offices, of which four are in Mumbai and one in Bengaluru.
Most of the commercial real estate lease deals are usually entered into once the property is completed and is ready to be occupied. However, certain agreements in rare instances are entered into while the property is still under construction and qualify as pre-commitments.
The city has seen some of the biggest office-space deals in the past. In 2016, TCS had leased about 2 million sq ft of built-to-suit space at Hiranandani Estate in Thane. Monthly lease rental for this transaction was set between Rs 50 and Rs 55 per sq ft a month.
The same year, healthcare product maker Abbott India had picked up an entire under-construction building with over 160,000 sq ft built-up area in Mumbai’s Andheri suburb to set up an innovation and development centre.
This agreement for the built-to suit standalone building was also for a lease running through 15 years with total annual lease of over Rs 23 crore.