New Delhi

Vacancy in prime office space in Chennai has declined to nearly 10 per cent from a peak of 15.8 per cent in 2023, driven by strong demand, particularly from GCCs, and constrained new supply, according to CRE Matrix.

Real estate data analytics and research firm CRE Matrix has come out with a report, 'Chennai: Detroit of Asia; Rising with Innovation. Chennai's Office Frontier Beckons', which profiles the city's infrastructure, talent ecosystem, commercial office market, data-centre and energy landscape, and investment rationale.

As per the report, Chennai currently has a total of 120 million sq ft of Grade A/A+ office space, with another 42 million sq ft under construction.

Vacancy in office space tightened to 9.9 per cent at the end of June this year from a peak 15.8 per cent during the 2023 calendar year. The office space demand is outpacing supply at a ratio of 1.8 times.

"Chennai is now home to more than 400 Global Capability Centres and over two lakh professionals, the fastest-growing GCC hub among India's Tier-I cities, expanding at nearly twice the national pace," CRE Matrix CEO and Co-founder Abhishek Kiran Gupta said.

He noted that the occupancy costs in Chennai are roughly a fifth below Bengaluru.

"Chennai retains its people better than any other Tier-I market in the country," Gupta said.

CRE Matrix stated that Chennai offers the best value among Tier-I office markets.

"While Delhi (Rs 182), Mumbai (Rs 175), Gurugram (Rs 106) and Bengaluru (Rs 92) command significantly higher rentals, Chennai offers Grade A space at just Rs 75 per sq ft per month.

"Occupiers benefit from 20–60 per cent lower occupancy costs without compromising on infrastructure, talent, or institutional-quality assets," the report mentioned.

On human resource capabilities, CRE Matrix said that Chennai records the lowest voluntary attrition of any Tier-I GCC hub — 5.9 per cent in non-ER&D roles and 8 per cent in ER&D (engineering and R&D) roles.

In Chennai, the report said that there are many big developers with multi-million-square-feet portfolios.

While DLF holds the largest share of office stock, the market is supported by several other established developers with significant portfolios, resulting in a well-diversified and resilient supply base, CRE Matrix said.

Mindspace REIT's position as the second-largest owner in Chennai's ready stock was achieved through a combination of development and strategic acquisitions, it added.

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Tata Realty, The Xander Group, RMZ Corp, Ascendas/CapitaLand, Shapoorji Pallonji Group, Embassy REIT, Brigade Enterprises and Knowledge Realty Trust also have significant presence in the Chennai office space market.