Asian Paints, has leased more than 120,000 square feet of office space in the Lower Parel business district of Mumbai.
The new commercial office space is expected to be utilised as the center for its new business vertical of home furnishing, said persons with direct knowledge of the development.
Asian Paints has leased the space for a total tenure of nine years including a lock-in period of five years. The paints major is expected to pay more than Rs 166.32 crore as rentals over the total tenure of the lease excluding any rental escalations and maintenance charges.
“The agreement involves a clause to raise rentals 15% after initial 3 years and 5% every year after that,” said one of the persons mentioned above.
Last year, the company announced its foray into the business of home furnishing and its tie-up with a premium furnishing brand. The alliance involves Asian Paints managing the complete sales and marketing of the ranges offered by the collaboration and the partner furnishing brand will focus on design and production. It has also forayed into the home décor business.
The office space in Lower Parel, earlier known as Vodafone House, was earlier occupied by Vodafone India.
For the quarter ended September, Asian Paints reported 31% on-year growth in net profit at Rs 782.71 crore on the back of a 20% rise in sales at Rs 8,430.60 crore.
Last week, the company announced Rs 2,100 crore of phased investment to set up a new plant to produce vinyl acetate ethylene emulsion (VAE) and vinyl acetate monomer (VAM) in the country. The company announced another Rs 550 crore of investment to set up a white cement plant in the UAE in partnership with two local firms there.
The recovery in commercial real estate, especially office spaces, after the Covid19 pandemic is getting broad-based as indicated by the rising number of small and mid-size leases and outright transactions across segments and key property markets.
The commercial office segment, which was significantly impacted by the pandemic, has made a strong comeback in the last 3-4 quarters, supported by strong economic growth, increased hiring, and a return to the office trend, keeping the office sector buoyant.
The Indian office market grew substantially and delivered a strong performance in the first half of 2022. Office transactions recorded at 25.3 million sq ft, a 107% on-year growth, indicated the potential of the market on the back of a waning pandemic and the promise of a sustained economic recovery.
The IT and ITeS segments are among the prime drivers of overall leasing activity in the top cities and bulk hiring by these firms will influence demand for large quality office spaces.
