Chennai commercial real estate seems to be in a sweet spot. While the rest of the country is reportedly struggling with overall economic slowdown, this city’s office commercial segment seems to be booming.
Chennai has witnessed jump of whopping 35 percent in year-on-year office leasing in the first three quarters of 2019. As per a recent report by CBRE, leasing activity in Chennai also increased on a quarterly basis.
The boost in Chennai’s office space was primarily driven by technology, engineering and banking, financial services and insurance firms. The recent spur came owing to large-sized deals (more than 100,000 square feet) that happened in special economic zones.
Additionally, Central Business District (CBD), off-CBD and Old Mahabalipuram Road (from Toll Gate to Sholinganallur) witnessed a robust supply which led to further spur in the activity.
The past quarters also saw a slew of inking of large pre-commitment deals in prominent under construction projects which are lined up for delivery in the following quarters. Since there is a wide positive intent from corporates to consolidate and expand their operations in the city into new investment grade projects, the growth momentum is expected to continue for the next few years.
The main micro-markets of Chennai that saw a surge in the activity are OMR Zone from Sholinganallur to Siruseri followed by Toll Gate to Sholinganallur stretch. In fact, these areas contributed to close to 80% of the total absorption.
Ameeth Raja, Head, Advisory & Transaction Services, Tamil Nadu and Kerala, India, CBRE South Asia, said that the market witnessed a jump in leasing activity, primarily driven by demand among Special Economic Zone projects in key suburban and peripheral locations of the city, with enterprises taking up space for expansion requirements. He also said that office rentals will be more rationalized and controlled. He said currently, there is less vacancy of available office space, which be around 2 to 3% and things will change when an additional 5.5 m to 6 million square feet new office space will be offloaded by the end of the year, The New Indian Express reported.
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