Chennai office market witnesses growth

Chennai

Chennai office market has notched up absorption of 0.5 million sq ft during the first quarter and the city may witness a surge in SEZ supply during the coming months.

The year began on a sluggish mode due to cascading impact of global meltdown aggravated by the strong supply line across the city. In fact, surveys by international property consultants reveal that the city’s net absorption during first quarter was the lowest in almost two years.

In a related development, manufacturing sector accounted for around 51% of the total transactions, while the share of the IT/ITES dipped to around 36% during the first quarter from around 60% during the previous quarter, according to Jones Lang LaSalle’s quarterly survey. Apart from the investment grade spaces, around 60,000 sq ft of grade B space got leased out during the quarter, of which more than 50% was leased out in the CBD locations.

No new supply was witnessed during the quarter amid delays in the project completion of Platinum Holdings in Navalur and Isana in Arumbakkam.

The transactions witnessed during the first quarter were focused largely on areas like Velachery, Perungudi, Mount Poonamallee road besides GST road, Ambattur, perungalathur, Sholinganallur and Siruseri.

According to CB Richard Ellis’ quarterly survey, the CBD witnessed a dip in demand for office space with negligible absorption of around 0.09 million sqft. The Off / Non CBD micro-market of MRC Nagar, Guindy and Taramani witnessed stagnation in market activity when compared to the previous quarter. The Suburban Business District (SBD) including areas such as Velachery, Perungudi, Mount Poonamallee Road witnessed maximum activity during this quarter with an absorption of almost 0.32 million sq ft being reported, compared to around 0.25 million sq ft in the previous quarter.

Overall the market sentiment continues to remain positive which is expected to translate into healthy absorption over the coming few quarters, according to industry sources. The SEZ segment should continue to witness supply addition, thereby being a major contributor to the office market in the city. IT and back-office operations are expected to continue to remain major contributors of office space demand and transaction activity. Rental values are expected to remain largely stable across most micro-markets over the coming few quarters.

V Nagarajan, Property Consultant

Source: http://content.magicbricks.com/chennai-office-market-witnesses-growth