A town that was once considered an underdog now stands tall. In India’s tremendously aggressive office actual property market, which has historically been ruled through towns like Mumbai, Delhi-NCR, Bengaluru and Hyderabad, a new protagonist is emerging—Chennai. “it is the handiest city that has seen boom inside the workplace [real estate] markets this year up to now,” says Chandrakant Kankaria, Joint MD of Olympia group, that is arising with a 1.2 million sq. toes (msf) tech park in top Chennai workplace locality Guindy.
The numbers endure out Chennai’s rise. With an uptake of 6.five msf of office space inside the first 9 months of 2023 among January and September, Chennai has now not just passed its whole 2022 consumption but stands shoulder-to-shoulder with essential markets like Mumbai (five.6 msf), Delhi-NCR (6.5 msf), Bengaluru (10.6 msf) and Hyderabad (6.6 msf), consistent with facts from industrial actual estate offerings and funding company CBRE. In truth, the metropolis accounted for 15% of India’s general workplace space absorption in the course of this era. “despite global headwinds, Chennai’s workplace marketplace has proven resilience, which is clear thru the 2 msf office space it absorbed in July-September 2023, a 58 per cent yr-on-year growth,” says Anshuman magazine, Chairman & CEO-India, South-East Asia, centre East & Africa of CBRE.
Historically unnoticed within the workplace actual estate domain and regularly seen as a secondary alternative, the southern town is experiencing what Shrikant Joshi, CEO and MD of L&T Realty, says is an escalating call for cutting-edge workplace spaces. The company is growing a 10-tower L&T Innovation Campus in Manapakkam on Mount-Poonamallee street, spanning 5.five msf. “customers increasingly demand spaces that seamlessly combine superior digital connectivity, pinnacle-tier office certificate add-ons and sustainable add-ons. This entails developing office spaces that adhere to platinum-rated inexperienced building requirements and feature multi-delicacies F&B and nicely certificati accessories, ensuring no longer handiest best however additionally occupant health,” he says. proper certification is a global rating machine for homes that promotes the fitness and nicely-being of occupants.
Important actual property developers—each regional and pan-Indian—along with L&T Realty, DLF, RMZ and Olympia organisation, are growing expansive workplace areas inside the metropolis, while main MNCs inside the IT, BFSI (banking, monetary offerings and insurance) sectors, international capability centres (GCC), or even legacy Chennai add-ons are securing extensive workplace spaces. numerous factors, along with a thriving financial system, a massive pool of skilled talent, strong infrastructure, and some distance lower condominium costs as compared to its competitors, are adding to the town’s allure.
Even as the IT industry is generally the largest client of managed workplace areas, Chennai is a much greater marketplace, attractive to an extensive variety of add-ons. “Call for growth is coming no longer just from the IT sector however also from banking, logistics, production, engineering, SaaS and GCC firms,” says Rishi Das, Co-founder and CEO of IndiQube. The Bengaluru-based flexi operating area issuer, which has been ramping up ability inside the town, plans to add 20,000 seats over the subsequent two years.
However, the marketplace in Bengaluru is overwhelmingly ruled by start-usa and IT add-ons accessories. further away, Hyderabad is likewise an MNC- and pharma-pushed marketplace. specialists say these corporations’ accessories have a tendency to grow in short and rapid cycles, which means that these markets heat up and cool down quickly. luxurious economic capital Mumbai is more proper for head places of work and smaller centres, whilst businesses scale up in some other place. Pune is once more skewed toward MNCs and offshore improvement centres, while Gurugram is the simplest part of Delhi-NCR witnessing increase in workplace area. Das says Chennai’s diversity guarantees that the marketplace does not crash even when things are not going high-quality. “It’s a degree-headed marketplace. this is why we have been able to scale up so nicely in Chennai to twenty,000 seats.”
At the same time as its fashion keeps within the city, albeit at a miles slower tempo than ultimate yr, Chennai is likewise attracting interest from international banks. The UK-based preferred Chartered global business offerings (StanChart GBS) is opening its largest campus globally within the metropolis. The 740,000 sq. toes facility at the upcoming DLF Downtown in Taramani, scheduled to open in Q1CY25, will house all its 17,000 Chennai employees, who are currently spread out throughout 4 workplaces. Says Venkatakrishnan Subramaniam, HR Head-Chennai at well known Chartered GBS India: “whether or not it’s far coins, trade, liability, asset, offerings, transact add-ons, compliance, chance, generation, finance or HR, you name it and there’s a big talent set to be had here,” he says, including that the common length in their crew units is 500-plus, and 130-one hundred forty senior-maximum leaders within the agency are in Chennai. “i am getting an excellent confluence of people from throughout the u . s . a .. that is why we were capable of scale up from round 370 employees on the start 20 years ago to 17,000 now.”
L&T Realty’s Joshi attributes the city’s instructional prowess, professional personnel and superior dwelling requirements as the reason MNCs are drawn to the city. A robust campus culture over the past decades has ensured a normal delivery of junior- and centre-control skills swimming pools. In addition, Chennai additionally offers a greater stable staff wherein worker tenures are typically longer and attrition is decreased. Subramaniam says the common tenure in their personnel across experience bands is five-6 years, which means that they enjoy the entire product cycle and make room for experimentation. “Chennai is minimalistic and functional, not like Bengaluru which benchmarks the whole lot with Silicon Valley. They don’t anticipate too many, which include goodies, freebies and the entire shebang of infrastructure like big breakout regions, which personnel in Bengaluru do,” says Das, including that an HR professional’s task is easier in Chennai.
Even a decade in the past, it was common for professionals in Chennai to migrate to different cities or nations for professional development, however that’s no longer the case anymore. Now, the influx of many multinationals, a thriving start-up subculture, and worldwide players establishing their GCCs have ensured a higher best of possibilities. For instance, GCCs of add-ons accessories like Shell, Qualcomm, Hitachi power India, and so forth., have made large commitments to Chennai’s workplace real estate market, with Dow chemical compounds alone leasing a full-size 250,000 sq. feet space in Q3CY23.
but this isn’t entirely a tech-driven surge. because the home sectors are doing nicely, engineering, healthcare and logistics also are fuelling the boom in office space consumption right here. For instance, prominent wind turbine company Vestas recently secured 250,000 sq. toes of area. What’s exciting is that even legacy domestic-grown firms are joining the race. previously restrained to their company homes or manufacturing facility spaces, those companies like Murugappa institution’s Cholamandalam Finance and TVS credit are seeking grade-A workplace spaces similar to MNCs, indicating a shift in their operational techniques. Both Cholamandalam and TVS ‘credit score declined to speak about their plans for the story.
Olympia’s Kankaria says, “The Murugappa institution is now a dominant office area user in Guindy. in advance, they had been no longer a part of controlled workplace areas. Traditionally, those companies have appreciated their very own belongings. however now they’re also searching at cost in leasing space in new-gen buildings due to their increased needs.”
IndiQube additionally showed that they are in talks with several legacy firms for flexi areas. “those firms face stress from their tech talent who need to be in swanky workplaces. So, they make an exception for his or her tech skills as a minimum or begin their experiment with the brand new-age add-ons accessories,” says Das. IndiQube recently leased out a hundred,000 sq. feet assets to Air India close to Raj Bhavan in Chennai. “It changed into an experiment that laboured so nicely that a number of senior employees are putting up selfies on social media. Now we are speaking to Air India for as a minimum 5-6 places throughout the u . s ..”
As Chennai rises as a desired workplace destination, rents have also inched up marginally in maximum submarkets. L&T’s Joshi expects the Manapakkam leases to boom further from `sixty five–70 consistent with sq. feet per month in the close to time period because of growing call for and a scarcity of Grade A+ workplace homes with a campus atmosphere. However, the city nevertheless has a few ways to go. The recent Cyclone Michaung has uncovered many chinks in its armour, appreciably as the town is gearing up for a global buyers Meet inside the first week of January 2024. Tamil Nadu’s nodal business enterprise for funding promotion, ‘steerage’, did no longer reply to commercial enterprise today’s requests for a remark, but principal MNCs are undeniably thinking about accessories such occurrences even as assessing risks earlier than figuring out their strategic places. “After the ultimate 12 months’s Bengaluru floods, larger companies ask for flood and topography reviews earlier than putting in places of work within the city now. earlier, no person is afflicted to ask for these things,” says IndiQube’s Das. specialists say it’s miles handiest a count of time earlier than greater add-ons follow suit. Which means, Chennai nevertheless has some paintings reduced out for itself, if it desires to cement its location as a desired metropolis for fundamental workplace spaces in India.
Subramaniam says it was a task to attract talent to Chennai within the early part of their India adventure. “However, that has been completely modified within the past 4-5 years. Now getting the right kind of skills from throughout the banking industry is now not a difficulty.” Plus, the general infrastructure development within the form of transportation in the metropolis and connectivity to different parts of the US, extended food choices, a dwindled language barrier, healthcare and schooling facilities, and a mixture of culture and modernity also are operating within the city’s favour, say professionals. “From the critical enterprise District, attending to IT corridor OMR (antique Mahabalipuram avenue) or the airport doesn’t even take half the time it does in Bengaluru,” says Das.