APPD Market Report Article
ChennaiDecember 1, 2021
Net absorption up by 526% q-o-q
- Chennai’s office market recorded a net absorption of 0.7 million sq ft, a significant increase of 526% q-o-q and 241% y-o-y. The increased awareness of and preparedness for the pandemic, along with the mass vaccination drive and the unlocking of economic activities have aided in bringing occupier confidence back to the market.
- SBD and SBD OMR remained the most preferred submarkets, contributing 76% of the total leasing activity. Leasing activity was driven by IT/ITeS, BFSI and e-commerce during the quarter.
Grade A supply of 0.37 million sq ft becomes operational
- DLF IT Park Block 12 and Olympia Inspire, with a total area of 0.37 milllion sq ft, became operational in the SBD submarket in the quarter. Almost 60% of the newly completed space was pre-committed.
- By end-2021, the city is set to witness a supply infusion of another 0.59 million sq ft by prominent developers, pushing the total Grade A stock to 69 million sq ft.
Rents and capital values are unchanged
- Rents remained largely stable during the quarter. This was due to the increase in vacancy levels over the past few quarters. Grade A developers in the city continue to take an accommodative stance by offering concessions on rents to retain existing occupiers and attract new occupants.
- Developers offered extended rent-free periods, discounts on parking charges and common area maintenance charges on a case-by-case basis to support occupiers.
Outlook: Chennai’s office market recovery on track
- It has been a progressive office market environment in 3Q21 and this momentum is expected to continue in the coming quarters as the demand for office space continues to grow, backed by consolidation and expansion of office spaces and increasing demand for satellite offices.
- With the unlocking of the economy and mass vaccination drives, many IT firms are keen to bring their employees back to the workplace. They have either opened their offices or are gradually allowing more employees to return to work. This will play an important role in the recovery of the office market.