Economic boost? 35% jump in office space use

More space being leased by technology, engineering, banking and financial services
Experts say leasing going up is a good sign for youth employment | Ashwin Prasath
Experts say leasing going up is a good sign for youth employment | Ashwin Prasath

CHENNAI: Chennai has witnessed a jump of 35% in office leasing (year to date) as compared to 2018’s third quarter and demand was primarily driven by technology, engineering and banking, financial services and insurance firms, according to a report by CBRE, a leading real estate consulting firm. 

According to the report, leasing activity in Chennai increased on a quarterly basis driven by large-sized deals (more than 100,000 square feet) in special economic zones while supply addition was witnessed in Central Business District (CBD), Off-CBD and Old Mahabalipuram Road (from Toll Gate to Sholinganallur). 

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.

The current quarter also saw inking of large pre-commitment deals in prominent under construction projects which are lined up for delivery in the following quarters. This momentum is expected to continue for the next few years owing to positive intent from corporates to consolidate and expand their operations in the city into new investment grade projects. Demand was primarily from main technology, engineering and BFSI firms, he said.

Leasing activity was led by OMR Zone from Sholinganallur to Siruseri followed by Toll Gate to Sholinganallur stretch and these three micro-markets, accounted for nearly 80% of the total absorption. 
The city also witnessed closure of several pre-leases in prominent under-construction developments in OMR Zones 1 and 2, that are slated for completion in coming quarters. Most deals were closed in primary spaces. 

Raja said office rentals will be more rationalised 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.

S Sridharan, chairman of Confederation of Real Estate Developers Association of India, Tamil Nadu, told Express that currently, there is a huge demand in office space as a lot of top projects including the World Trade Centre project, are coming up in the city. Leasing going up is a good sign. It will generate more jobs for youth, he added.

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