The Phoenix Mills, retail-led mixed-use asset developer and operator, is strategically expanding its commercial offices portfolio with plans to incorporate assets spanning 5.1 million sq ft in proximity to its existing retail malls across five key cities in India over the next three years.
This initiative is poised to elevate the company’s operational office projects portfolio to 7 million sq ft by 2027, up significantly from the current 2 million sq ft.
Of this total expansion, Pune will see 1.2 million sq ft development followed by a 1.1-million-sq-ft project in Mumbai. Bengaluru will witness a total development of 2.4 million sq ft development across two major assets of 1.2 million sq ft each, while Chennai will get a 4 lakh sq ft office asset taking its total office assets expansion to 5.10 million sq ft.
“In recent years, India has stood out on the global stage in terms of economic and social recovery and has proved itself to be the engine of world growth. This is well reflected in the strong recovery in office space absorption, with return to work closer to pre pandemic levels in major cities such as Mumbai, Pune, NCR and Chennai,” Shishir Shrivastava, MD, The Phoenix Mills, told ET.
According to him, as growth accelerates and organizations continue to expand, the limited quality office supply finds itself in much demand which is exhibited in the low vacancy numbers and robust rental trends in grade A buildings in these cities.
In its commercial offices current operational portfolio, the company has witnessed a robust leasing traction during the nine months ending December, with gross leasing of over 4.8 lakh sq ft. Of the total leasing over 3.4 lakh sq f is new leasing and leases for 1.4 lakh sq ft offices space has been renewed during this period.
“In our current operational office portfolio, we have observed renewals at end of contract term to be in the high 90’s percentage with several of our office occupants also expanding their office spaces during the last 9 months. Despite the global headwinds, Grade A commercial office spaces continue to see increased demand from new tenants as well,” Shrivastava said.
The company will be financing this expansion through internal accruals. For the quarter ended December, it has reported the highest ever quarterly consumption at Rs 3,287 crore, up 24% from a year ago. Gross retail collections rose 30% during the quarter to over Rs 700 crore.
Consumption across the company’s retail malls in the first three quarters of 2023-24 grew 21% to Rs 8,500 crore. The strong ramp up in consumption was witnessed during the third quarter across the newly launched malls.
Bengaluru’s Phoenix Mall of Asia, which was launched in late October, saw trading occupancy of 50% in December as against 43% in October. Phoenix Mall of the Millennium that was launched in Pune’s Wakad in September witnessed trading occupancy of 60% in December against 44% in September. Launched in February, Palladium Ahmedabad’s trading occupancy rose to 78% in December from 74% in September.
Undeterred by the disruption caused by the Covid-19 pandemic over the last couple of years, retail consumption has bounced back making sharp progress in recovery, which is supporting mall developers’ confidence to continue focusing on their plans to develop more malls across major cities of India.
In 2022, Singapore’s sovereign wealth fund GIC invested Rs 400 crore for additional stake in three subsidiaries of The Phoenix Mills taking its investment in these entities to Rs 1,511 crore.
This was GIC’s second tranche of investment under its strategic partnership with the company to set up a joint venture to develop, own and operate retail-led, mixed-use projects across India.
