How to Revive Mumbai’s Commercial Real Estate Market?
The Commercial Real Estate Slump
It is not a secret anymore that Mumbai’s commercial real estate market is in a slump. There is a lot of unsold inventory in all the major corporate office zones of Andheri, Malad and BKC (Bandra Kurla Complex). During the boom time, builders and developers bet heavily on larger spaces with high expectations of occupancy by foreign conglomerates and MNC’s. There was an influx of several big companies during the early 2000’s. Builders and developers were flocking to fulfill their demand for entire mammoth structures. However, basic economics has proven the age old cycle of saturation of demand and we land up with excess.
Focus on Larger Commercial Offices
The entire focus of commercial real estate developers has been in larger offices. Even now, there are entire office complexes available with complete floors of 10,000 square feet that are completely empty. Prime example is the Diamond Bourse. In the bargain they have ignored the common man’s requirement of smaller office space. There is a scarcity of offices in the 300 to 800 square feet range. The demand for budget offices is out there. There is a constant inquiry for offices under the 1000 square feet range. People are willing to pay the market price to acquire these offices. The ticket price on these offices are less than Rs. 4 Crores (approx. US $ 650,000). Believe it or not in a metropolitan city like Mumbai, this is very much affordable.
Efficient Showrooms and Shops
It’s astonishing to think that shops and showrooms under 1000 square feet are a rarity nowadays. Everywhere you go, there are multiple floors of sprawling retail space. Unfortunately most of them are lying empty with the select lucky ones that are occupied. Small businesses are the backbone of any economy. A small business owner always requires smaller size to keep his costs down. Maintenance costs are lower, electric costs are lower, renovation and upkeep costs are lower. The ideal size for the small retail business owner is 500 square feet of shop space with a height of 14 feet. This provides him with the ability to add a mezzanine floor for extra storage or space.
How to Beat the Commercial Real Estate Slump
The slump should be a wake up call for developers and builders to focus on the common man’s requirement. There might not be a lot of prestige involved in building efficient spaces. However, there is a lot of money to be made in efficient spaces. The demand for smaller offices is there, with an average person looking for a 300 square feet to a 500 square feet office space.In showrooms they are ideally looking at around a 1000 square feet.
Let’s make blocks of office complexes and provide them with attached bathrooms and a kitchenette. Keeping a common bathroom on the floor for the labor folks would divide the class from the mass. Retail spaces should be placed between blocks of 500 square feet to 1,200 square feet, with room for expansion above in height as well as below in the form of basement. Restaurant spaces should be designated within complexes to ensure cleanliness, hygiene, exhaust and fire safety.