Key markets to get 12 million sqft of office space in 3 years

CHENNAI: Key preferred micro-markets like pre-toll OMR, Perungudi-Sholinganallur stretch of OMR and Mount-Poonamallee High Road in Chennai are expected to witness supply of 12 million sqft of new office space in the next 2-3 years. Occupiers from IT/ITeS sector would remain the demand drivers for office space, followed by automotive, banking, financial services and insurance (BFSI), research and consulting sectors. Much of the space would come up in projects promoted by K Raheja Corp, Embassy and RMZ Group, said realty consultant CBRE in a report, ‘Destination 2020’, released in Chennai on Wednesday.


The office sector is likely to benefit from consolidation from existing corporates and entry of new players in the flexible workspace solutions and global insourcing centres, the report said.

Chennai has the right ingredients like excellent manpower and physical and social infrastructure to sustain long-term investments, said CBRE chairman (India and South East Asia), Anshuman Magazine. It remains a crucial market for CBRE and close to 40% of hiring by the company is done from southern markets, primarily Chennai, he said. “We expect sectors such as technology, affordable housing, warehousing, industrial, retail, capital markets and government advisory to drive growth for CBRE,” said Magazine.

Unlike its southern counterparts like Bengaluru and Hyderabad, where IT/ITeS continues to sustain commercial demand, Chennai’s commercial activity is driven not just by IT, but also manufacturing and banking, financial services and insurance sectors, resulting in a comparatively stable commercial market, said executive director Preetham Mehra. With the introduction of GST, Chennai has also firmly established itself as a destination of choice both for warehousing investors, operators and occupiers by virtue of having multiple seaports, an international airport and excellent road network across the state, the report said.

In the first half of the current year, 10 million sqft of warehousing space was leased out in the country. Of that, about one million sqft was transacted in Chennai, said MD, (advisory and transaction services), Ram T Chandnani However, competition from other cities is getting tougher. Hyderabad and Pune have overtaken Chennai. Bengaluru is the market leader by a huge margin. “Slow approvals pulled down the growth in Chennai for a while. Also, there is scarcity of A grade ready-to-use office space in the city. This prompts companies to look at alternatives, especially Bengaluru and Hyderabad,” said Chandnani.