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The Phoenix Mills, a leading retail-led mixed-use asset developer, has announced plans to expand its commercial offices portfolio. The company aims to integrate assets spanning an impressive 5.1 million square feet across five key cities in India over the next three years.
This initiative is set to transform the company's operational office projects portfolio, pushing it to 7 million square feet by 2027 from its current standing at 2 million square feet. The expansion will be strategically distributed, with Pune taking the lead with a 1.2 million square feet development, closely followed by Mumbai's 1.1 million square feet project. Bengaluru will witness a total development of 2.4 million square feet across two assets, each boasting 1.2 million square feet. Chennai will also see a 400,000 square feet office asset.
Shishir Shrivastava, the Managing Director of The Phoenix Mills, highlighted the remarkable economic and social recovery that India has undergone, positioning itself as a global growth engine. He emphasised the robust recovery in office space absorption, with major cities like Mumbai, Pune, NCR, and Chennai witnessing a return to pre-pandemic levels. The company is experiencing low vacancy numbers and robust rental trends in grade A buildings in these key cities, indicating a positive market sentiment. "As growth accelerates and organisations expand, the limited availability of quality office space is driving high demand," noted Shrivastava.
In the current operational portfolio of commercial offices, Phoenix Mills reported impressive leasing traction during the nine months ending December, with gross leasing exceeding 480,000 square feet. Notably, over 340,000 square feet of this figure represents new leasing, while leases for 140,000 square feet of office spaces were renewed during this period.
Shrivastava pointed out that renewals at the end of the contract term are consistently above 90%, with several office occupants expanding their spaces in the last nine months. Despite global headwinds, grade A commercial office spaces continue to experience increased demand from new tenants in India.
To finance this ambitious expansion, The Phoenix Mills is relying on internal accruals, signalling confidence in its financial strength and the potential of the rising commercial real estate market in India. As the company pushes itself into this new phase of growth, the move underscores its commitment to meeting the evolving needs of businesses and further solidifying its position as a key player in India's commercial real estate landscape.
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