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Chennai Q1 2022 gross absorption highest in five quarters at 1.5 msf

1536 Chennai Q1 2022 gross absorption

Chennai accounted for the 2nd highest supply pan India during Q1 2022 with a share of 22%

 

Chennai, 18 April 2022: Chennai recorded gross absorption of 1.5 million sq ft during Q1 2022, a 3.5x rise YoY. This was led by prior precommitments by large occupiers that got absorbed now. Technology sector accounted for almost half of the total leasing during the quarter. Large deals accounted for 54% share in total leasing, led by tech occupiers who are looking to consolidate offices and take up larger spaces in the city.

Majority of the leasing activity was concentrated in Mount Poonamallee road (MPR), which accounted for almost 36% of the city’s absorption, followed by CBD and Old Mahabalipuram Road (OMR) pre-toll locations, which accounted for about 21% and 18% respectively. 

“During Q1 2022, India’s office market witnessed the highest absorption in 2 years. Chennai recorded a whopping 3-fold jump in absorption clocking at 1.5 million sq. ft in comparison to Q1 2021. Clearly, business sentiments are returning to normalcy after the waning impact of the third wave of Covid-19 post January 2022. Flex spaces contributed to about 13% of the absorption and we expect the trend to grow as occupiers are expected to incorporate more flexible spaces while realigning and re-optimizing their portfolios. We also anticipate this streak in leasing momentum to continue through the next quarters,” said Kanchana Krishnan, Managing Director, Chennai, Colliers India.

Trends in Grade A gross absorption (mn sq ft) - Chennai

 

Q1 2022

Q4 2021

Q1 2021

QoQ

YoY

1.5

0.8

0.4

86%

>100%

 

Source: Colliers

Trends in Grade A Supply (mn sq ft) – Chennai

 

Q1 2022

Q4 2021

Q1 2021

QoQ

YoY

3.2

0.3

0.3

>100%

>100%

 

Source: Colliers

Chennai emerged to second spot during Q1 2022, with a supply share of 22% pan India

Chennai saw significant new supply of 3.2 million sq ft during Q1 2022, a multifold increase, as developers anticipate demand returning to the market. During 2021, developers had put their projects on hold, and postponing until market scenario improves. All the new completions were seen in MPR, Pallavaram Thoraipakkam Road (PTR) and CBD, as these locations have emerged as ideal destinations for occupiers looking for quality Grade A space.

“As expected, the Chennai office market made a comeback in the first quarter of 2022, showcasing a favorable demand scenario with MPR and CBD witnessing maximum absorption of 36% and 21% share in total leasing. With employees returning to offices, we expect this momentum to continue in Q2 2022,” said Arpit Mehrotra, Managing Director, Office Services, South India, Colliers.

The city is likely to see new supply of about 4.0 million sq ft over the next quarter. The supply is likely to be concentrated in Grand Southern Trunk (GST) road, Pallavaram Thoraipakkam Road (PTR) and Old Mahabalipuram Road (OMR) Pre-toll. Vacancy levels are likely to remain elevated despite improving demand, due to robust supply pipeline. During Q1 2022, grade A vacancy of the city increased by 2.5 percentage points from previous quarter and stood at 20% at the end of Q1 2022.

Technology sector remains the top sector followed by Engineering & manufacturing

Technology sector continued to remain the most dominant demand driver, contributing to 49% of the city’s overall leasing. Engineering & manufacturing, as well as flexible workspace operators were significant contributors too, accounting for 15% and 13% of leasing share, respectively.

Key demand drivers - Q1 2022

Demand drivers

% Share of leasing

Technology

49%

Engineering & Manufacturing

15%

Flexible workspace

13%

Others

23%

Note: Others includes BFSI, healthcare and Pharma & consulting services

Source: Colliers

 

Media Contact:

Sukanya Dasgupta

Director & Head, India Marketing & Communications

Sukanya.dasgupta@colliers.com

+91 9811867682

 

Riddhi Vira

Manager, Public Relations | India

riddhi.vira@colliers.com

+91 9619776362

About Colliers

Colliers (NASDAQ, TSX: CIGI) is a leading diversified professional services and investment management company. With operations in 64 countries, our 17,000 enterprising professionals work collaboratively to provide expert real estate and investment advice to clients. For more than 27 years, our experienced leadership with significant inside ownership has delivered compound annual investment returns of 20% for shareholders. With annual revenues of $4.1 billion and more than $50 billion of assets under management, Colliers maximizes the potential of property and real assets to accelerate the success of our clients, our investors and our people. 

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Kanchana Krishnan

Managing Director, Chennai

Chennai

Kanchana is a highly seasoned real estate professional and one of the senior-most industry leaders in Chennai. Kanchana has close to two decades of experience in the commercial real estate industry in Chennai.

In her long and illustrious career, Kanchana has advised some of the leading global occupiers, owners, and investors on their real estate strategies. Kanchana has held senior leadership roles at Knight Frank, Cushman & Wakefield, and most recently at JLL India, where she headed their office leasing, retail, and data centre businesses in the Chennai region along with leading the landlord representation business for India.

A passionate and renowned industry leader, Kanchana joins Colliers with a focus on business development to build the scale of its transaction service lines in the Chennai region and to drive exceptional results for clients. She will leverage her existing network of strong relationships with leading landlords, occupiers, and global investors to lead client relationship management in the region and expand Colliers’ client base to amplify the potential and reach of the brand.

Kanchana will strengthen the company’s existing transaction service lines in Chennai and also identify opportunities to introduce new service line specialisations by hiring and developing the best industry talent.

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Arpit Mehrotra

Managing Director | Bengaluru & Head of Flex | India

Office Services | South India

Bengaluru

With over 17+ years’ experience, Arpit is responsible for the overall  direction, strategy and growth of the firm. Arpit enjoys strong relationships with both private investors, Developers as well as local and global corporates and interacts regularly with key clients to uncover opportunities in the rapidly moving  market & other cities. 

His key responsibility is represents client interests by addressing all service related issues and assisting them counter strategic and operational challenges, plays a very crucial role in strategizing end-to-end real estate solutions for Key corporate occupiers and developers including advice on leasing, sale /purchase. Having in expertise in managing the lease negotiations, lease structuring & closure on their behalf.

He has expertise in planning, undertaking demand assessment studies and transactional services including marketing strategies based on technical real estate market analysis and has successfully managed leasing and sales assignments for leading corporations, including Nokia,Philips, Mitel, Mavenir Pega, Novartis, Amazon ,United Health Group, Oracle, Accenture, Cognizant Technology, HP, Tieto, Lenovo, NCR,  NTT Data, Motorola, Ernst & Young  to name a few.

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