Asia Pacific Office Outlook 2024

CHENNAI

K E Y M E S S AG E S

SUPPLY

DEMAND

RENTS

KEY OUTLOOK

 Chennai is expected to witness new supply of 17.5 msf during 2023–2025, with the majority of this supply (51%) concentrated in the prime submarkets of South West and Suburban South.  Nearly 26% of the upcoming space (1.8 msf) in 2024 is pre-committed, mainly by BFSI and IT-BPM majors.

 Due to healthy demand, net absorption is forecast at 2.45 msf as of end-2023.  Vacancy is expected to increase to around 18.6% in 2023 due to large supply infusions anticipated for the entire year.  Net absorption of 2.5 msf is projected for 2024 recording a 2% y-o-y rise in net absorption from over 2.45 msf in 2023, largely driven by demand from IT BPM occupiers.

 Rents are forecast to grow at an average rate of 2.7% between 2023–2025, from INR 876 sf/yr by end-2023 to INR 904 sf/yr by 2025.

 South West, Suburban South and Peripheral South markets are likely to remain as prime office locations with enhanced connectivity to the CBD, on completion of Phase 2 of the Chennai metro project.  Chennai office market is anticipated to experience robust demand, particularly from the IT-BPM, Engineering & Manufacturing, BFSI and Flexible workspace operator segments, which

have shown significant growth in recent years.