Net absorption up by 22% q-o-q

• Gross leasing volumes rose 16% q-o-q in Q3 2025 to 2.3 million sq ft, driven by robust occupier demand. This brought YTD 2025 leasing to 6.1 million sq ft, an 8% increase from the same period in 2024, indicating a strong year for the office market.
• Demand was driven by Co-working providers with a 29% share, followed by IT/ITeS with 26% and BFSI and Manufacturing & Industrial with 18% each. Net absorption jumped by 22% q-o-q to 1.6 mn sq ft, with SBD and SBD OMR submarkets together accounting for 73% of Q3 figures.

New supply of 2.26 million sq ft added in Q3

• Five projects including Phoenix Palladium Offices-One National Park, ITPC Radial Road Phase 1 Block 2, Etica Malar Aurum among others across all major submarkets combined to add 2.26 million sq ft to the city’s Grade A stock.
• During 9M 2025, new supply reached 4 million sq ft, representing an 81% increase from the same period in 2024. The city’s vacancy rose marginally by 40 bps q-o-q to 7.8%, though it remained 160 bps below the year-ago figures.

Rents and Capital values rose marginally q-o-q

• PBD GST has recorded the highest rent growth in Q3 2025 at 12.7% y-o-y. SBD OMR rents have risen 6.3% y-o-y, propelled by new premium developments and rent increases across existing high-quality properties.
• Capital values increased by 3.7% y-o-y, aligning with rental growth. As a result, yields remained stable with no change recorded.

Outlook: Strong demand and supply anticipated in the coming years

• For the 2025-2026 period, the Chennai Grade A office market is anticipated to receive approximately 8-8.5 mn sq ft of new supply. PBD OMR and SBD are projected to contribute two-thirds of this total.
• Leasing demand is expected to stay healthy, driven by flexible workspace operators, IT, and GCCs across technology, manufacturing, and BFSI. The market should remain balanced as strong net absorption matches new supply, keeping vacancy rates steady at 7.0-7.5%.