Chennai office vacancy declines to 10% on strong GCC demand

NEW DELHI: Vacancy in prime office space in Chennai has declined to nearly 10 per cent from a peak of 15.8 per cent in 2023, driven by strong demand, particularly from GCCs, and constrained new supply, as per CRE Matrix.

Real estate data analytics and research firm CRE Matrix has come out with a report, ‘Chennai: Detroit of Asia; Rising with Innovation. Chennai’s Office Frontier Beckons’, which profiles the city’s infrastructure, talent ecosystem, commercial office market, data-centre and energy landscape, and investment rationale.

As per the report, Chennai currently has a total of 120 million sq ft of Grade A/A+ office space, with another 42 million sq ft under construction.

Vacancy in office space tightened to 9.9 per cent at the end of June this year from a peak 15.8 per cent during the 2023 calendar year. The office space demand is outpacing supply at a ratio of 1.8 times.

“Chennai is now home to more than 400 Global Capability Centres and over two lakh professionals, the fastest-growing GCC hub among India’s Tier-I cities, expanding at nearly twice the national pace,” CRE Matrix CEOco-founder Abhishek Kiran Gupta said.

He noted the occupancy costs in Chennai are roughly a fifth below Bengaluru. “Chennai retains its people better than any other tier-I market in the country,” Gupta said.

CRE Matrix stated that Chennai offers the best value among Tier-I office markets.

“While Delhi (Rs 182), Mumbai (Rs 175), Gurugram (Rs 106) and Bengaluru (Rs 92) command significantly higher rentals, Chennai offers Grade A space at just Rs 75 per sq ft per month. “Occupiers benefit from 20-60 per cent lower occupancy costs without compromising on infrastructure, talent, or institutional-quality assets,” the report mentioned.