Famed and feted for its sales prowess,Indias top consumer goods company Hindustan Unilever appears to be struggling to close one deal for about two years it has failed to find a buyer for an iconic building it owns in South Mumbai.When the Indian arm of Anglo-Dutch Unilever shifted its office to a new campus-style facility in the suburbs of Andheri in January 2010,it had hoped to sell its headquarters for 46 years Lever House in the Backbay Reclamation Area near Churchgate.The proceeds,it may have hoped,could have more than paid for the cost of the new 12.5-acre,state-of-the-art Andheri East campus,but so weak is the demand for properties in the central business district that the company had to recently launch a second attempt to sell the building after a previous attempt failed to find a buyer.Not very far from Lever House,and in an even more upscale location,stands the Air India building,a seafacing landmark of the city that towers over the Nariman Point area.Even as recently as a few years ago,its owner,national flag carrier Air India,could have monetized this 1974-built,24-storey building and hoped to ease some of its financial woes,but experts in the real estate business now say it will not be easy.Along Bangalores MG Road,vacancies have risen to 10% in the last three years.The vacancy levels in traditional CBDs are only growing,with large companies moving out of these business districts to better,cheaper buildings in the suburbs, says Sanjay Dutt,chief executive officer (business ) at property consultancy Jones Lang LaSalle India.
Locations such as Bandra-Kurla Complex and Lower Parel in Mumbai,Noida and Gurgaon in the national capital region were being increasingly preferred by businesses over the old favourites.And as this trend gathers pace,companies that had bought space in the original business districts are stuck,unable to attract buyers deterred by high prices or by tenants put off by a mix of high prices and poor quality amid a changing design paradigm.Much like Hindustan Unilever,companies such as Motilal Oswal,Standard Chartered Bank and Deutsche Bank,which have set up offices in Prabhadevi,Bandra Kurla Complex or Lower Parel,are also said to be looking to selling their old offices,but have not been able to do so.In the past one year,Axis Bank has moved out of its offices in Cuffe Parade near Nariman Point and has bought an office in Lower Parel because of similar reasons.In Delhi,while several companies still have a presence in the Connaught Place area,it is a token presence,kept only because of the areas proximity to ministries and government offices.Only companies that need to have smaller offices near government institutions will stay in the CBD, says Vivek Dahiya,CEO at GenReal Property Advisors.Companies that have little to do with the government have vacated Delhis CBD to places such as Noida and Gurgaon.In the case of Bangalore,the shift has been from MG Road and its nearby areas to places such as the Outer Ring Road,Koramangala and Whitefield,where rentals are comparatively much lower.The biggest thrust over the last two years has been in the Outer Ring Road where companies have moved because of the good social infrastructure and talent pool, says Juggy Marwaha,director for leasing at RMZ Corp,a commercial property developer.MG Road has lost out because of higher costs and low availability of land for new developments.Rentals here have fallen 15% in the last three years,while rentals in places such as the outer ring road have been on the rise.During the past three to four years,a steady stream of companies led by the likes of Accenture,Broadcom,HP and Symantec have all moved out of the area.Even today,a few of our clients are in the process of expanding and consolidating to new buildings in the suburban and peripheral locations, says Naveen Nandwani,director for Bangalore and Hyderabad at real estate consultants Cushman & Wakefield.
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