Commercial leasing activity set to pick up in Chennai
Commercial real estate registered 1.08 million sq ft of leasing activity in Chennai in the second quarter of 2018, taking the gross absorption in the year so far to 2 million sq ft. The second half of the year could be more promising and 2018 could surpass the five million mark achieved in 2015 and 2016, ‘India office property market overview,’ a report by Colliers International, said.
The pre-toll micromarket on the OMR accounted for almost 28% of the total leasing activity in the city. The Mount-Poonamallee high road and the central business district(CBD) regions contributed about 20% of commercial leasing. Posttoll OMR accounted for 14%, the report said.
Doing a projection for the period 2018-21, the report said demand for leased office space in Chennai is expected to remain consistent. Small and medium scale occupiers looking for space are expected to target Guindy, while large occupiers looking for economically cheaper options are likely to look at the post-toll OMR and Mount-Poonamallee high road.
There is an upcoming supply of 14 million sq ft of office space between 2018 and 2021, which will increase the total stock by about 25%. The rental during the period could increase by 3-4%. Meanwhile, the vacancy rate may remain at about 11% by the end of the year.