In the competitive landscape of India’s office real estate market, Chennai is swiftly outshining metropolises like Mumbai, Delhi-NCR, and Hyderabad. Despite its recent surge, the city faces challenges, notably exposed by a recent cyclone.
Chennai’s Rise: A New Office Real Estate Hub
Once considered an underdog, Chennai now stands tall, breaking the tradition of office real estate dominance held by cities such as Mumbai, Delhi-NCR, Bengaluru, and Hyderabad. Chandrakant Kankaria, Joint MD of Olympia Group, notes that Chennai is the only city witnessing growth in the office real estate sector this year. Olympia Group is set to unveil a 1.2 million sq. ft tech park in Guindy, a prime Chennai office locality.
Shifting Perceptions: From Overlooked to In-Demand
Traditionally overlooked, Chennai is now witnessing an escalating demand for modern office spaces. Shrikant Joshi, CEO and MD of L&T Realty highlights this shift by emphasizing the increasing demand for spaces that seamlessly integrate digital connectivity, top-tier office certifications, and sustainable features. L&T Realty is developing a 10-tower L&T Innovation Campus in Manapakkam, spanning 5.5 million sq. ft.
The Dynamics of Chennai’s Office Real Estate Boom
Major real estate developers, both regional and pan-Indian, such as L&T Realty, DLF, RMZ, and Olympia Group, are actively contributing to the city’s office space expansion. Leading MNCs in IT, BFSI, global capability centers, and local firms are also securing substantial office spaces. Factors like a thriving economy, a vast pool of skilled talent, robust infrastructure, and lower rental costs compared to competitors contribute to Chennai’s growing allure.
Beyond IT: Diversification Driving Demand
While the IT industry is a significant consumer of managed office spaces, Chennai’s market is more diversified, catering to a wide range of businesses. Rishi Das, Co-founder and CEO of IndiQube notes that demand comes not only from the IT sector but also from banking, logistics, manufacturing, engineering, SaaS, and GCC firms. IndiQube, a Bengaluru-based flexi working space provider, plans to add 20,000 seats in Chennai over the next two years.
Contrasting Chennai’s Market with Other Cities
In contrast to Bengaluru’s dominance by startups and IT firms, Chennai’s diversified market ensures stability, even during challenging times. Hyderabad, driven by MNCs and pharma, experiences shorter and faster growth cycles. Mumbai’s high costs make it more suitable for head offices, while Pune caters to MNCs and offshore development centers. Gurugram stands out as the only part of Delhi-NCR witnessing growth in office space. According to Das, Chennai’s level-headed market allows for scaling even in challenging times, as evident in IndiQube’s expansion to 20,000 seats.
In conclusion, Chennai’s ascent in the office real estate scene is undeniable, driven by a diverse economic landscape, a skilled workforce, robust infrastructure, and competitive rental costs, despite challenges brought to light by recent events, the city’s resilience and adaptability position it as a formidable player in India’s evolving office real estate market.
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