Office Space Absorption Drops by 35% in Chennai, Making It the Only Indian City to Experience a Decline: Report.

Taramani, Perungudi, MGR Salai in the OMR Zone-1 region, and Mount Poonamallee Road together accounted for 64% of the total market share.

Chennai is the only major city in India to report a decline in office space absorption during the third quarter of 2024, according to a recent report by Savills India, a global property advisory firm based in London. The city saw an absorption of 1.8 million square feet in Q3 2024, reflecting a year-on-year decrease of 35%.

Large deals of 100,000 square feet and above dominated leasing activity, making up 42% of the market share. The primary areas for leasing were Taramani, Perungudi, and MGR Salai in the OMR Zone-1 region, along with Mount Poonamallee Road, Manapakkam, Porur, Nandambakkam, and Ramapuram, which together accounted for 64% of the total market share.

Additionally, the Central Business District (CBD), Guindy, and OMR Zone-2 regions (including Thoraipakkam, Sholinganallur, Navalur, and Siruseri) also played significant roles, contributing 10%, 6%, and 9% to office space demand, respectively.

The report highlighted that the IT-BPM (Business Process Management) and BFSI (Banking, Financial Services, and Insurance) sectors remained the main drivers of leasing activity, contributing approximately 24% and 18% to the overall market share. While demand for office space is increasing, supply remains limited, with quarter-on-quarter rental rates along Mount Poonamallee Road and in the Guindy micro markets rising by only 7% to 9%.

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