Chennai
Chennai’s CBD areas observed a decline in demand for office space with the absorption recorded at around 44,000 sq ft, during third quarter predominantly in the smaller and medium format office spaces. In terms of new supply, a meagre 24,000 sq ft of fresh supply was added to the existing stock. Rental values were largely stable compared to the previous quarter.
According to CB Richard Ellis’s third quarter report, Off/Non CBD micro-market of MRC Nagar, Guindy and Taramani witnessed limited transaction activity during this quarter; with absorption at around 85,000 sq ft. Supply addition was negligible, which led to a marginal decline in vacancy levels.
Transaction activity was dominated by IT/ITeS occupiers, which encouraged few landlords to raise their rental expectations. This resulted into a marginal rental increase of 4-5 per cent q-o-q in the IT segment, even as stability was observed in the non-IT/commercial and SEZ segments.
The Suburban Business District (SBD) including areas such as Velachery, Perungudi and Mount Poonamallee Road witnessed restrained demand levels for office space, with absorption recorded at around 41,000 sq ft. There was no new addition of office supply to the existing stock.
Rental values remained stable in the non-IT/commercial segment; however, interest from IT/ITeS occupiers resulted into a marginal rental appreciation of 5-6 per cent in the IT segment. Vacancy declined marginally to 6-7 per cent during the present quarter.
The Peripheral Business District (PBD) of Perungalathur, Sholinganallur, Siruseri, Ambattur and GST Road continued to be the most active office market in the city. Around 35,000 sq ft of fresh Grade A space was added to the existing stock; whilst absorption was recorded at around 0.66 million sq ft.
A majority of the transaction activity was limited to IT/ITeS occupiers, preferring to locate due to low rents and large availability of Grade A office space options. Vacancy levels were estimated to be in the range of 15 – 16 per cent.
The city’s office market witnessed a marginal reduction in the absorption levels during the review period on account of weak market sentiments. As future supply is largely concentrated in the peripheral markets, values are expected to remain stable or decline marginally in these locations. Central and secondary business districts are expected to witness marginal rental appreciation due to negligible supply addition. Most of the office demand in the city will continue to be dominated by IT and back-office operations.
V Nagarajan, Property Consultant
Source: http://content.magicbricks.com/chennai-office-mart-rentals-remain-stable/
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