Chennai, capital of Tamil Nadu is one of the prime investment destinations in South India. It is popular with many industries including IT/ ITeS industry, retail and automotive and ancillary parts. What makes it attractive is not only the availability of huge land parcels, good social infrastructure and development of new projects and initiatives by the government, but also access to a highly skilled, talent pool. While in the recent past, Chennai saw a slump in commercial real estate, owing to natural calamities, change in central government policies; there has been a renewed interest in the city in the last quarter or two. Here’s a quick look at the top commercial micro-
markets in the city and what makes them tick.
OMR (before the toll plaza)
The stretch from the Madhya Kailash Junction till the Perungudi Toll Plaza, including Perungudi and Taramani, is popularly called the IT Corridor. The region has seen considerable growth over the last few years, favourable state government policies, rapid infrastructure development and availability of land has led to the growth of IT/ITeS offices here. Most of the projects located in the area have an area greater than 500,000 sq.ft., with large floor plans and good amenities. Apart from good office spaces, good social infrastructure, proximity to the city centre, easy access to the airport are some of the reasons that have further boosted the appeal of the region.
As of 2017, the total office space stock in OMR (before the toll plaza) is 15.5 million sq. ft. with a vacancy level of 6%. Consistent healthy absorption during the last few years along with the restricted supply of new space has led to receding vacancy levels. The rent in the area ranges from INR 75-85/sq. ft. per month.
The suburban markets of Chennai have attracted a steady flow of investors. The high rentals of CBD and off CBD areas and non-availability of land are the chief reasons for the rise of Guindy. This trend is expected to continue over the next few years as well thanks to the enhanced connectivity due to the metro line that has been operational in Guindy since September 2016. The area has a mix of occupiers ranging from IT/ITeS, manufacturing, and other service sectors, although the last few years have seen more investments from the IT/ITeS sector due to projects such as Olympia Technology Park and Tamarai Tech Park.
Factors such as proximity to the city centre, well-established physical and social infrastructure and affordable rental values have attracted various small and mid-sized IT/ITeS companies towards this market.
The total office space stock in Guindy currently stands at 5.2 million sq. ft. with a vacancy level of 5-6%. The present rate quoted in the area varies between INR 55- 65/sq. ft. per month. The rent in Guindy is kept in check with competing markets such as OMR and Ambattur.
GST Road is a prominent office hub of Chennai. A home to automobile and tech giants like BMW, Braun, Infosys, Wipro and Capgemini and several mid-sized players as well. This belt came into prominence in 2005 with the launch of the 1,550-acre Mahindra World City. The area boasts of operational SEZs, notably Sriram Gateway in Perungalathur and L&T Estancia in Guduvanchery. The area also includes Tambaram, that houses the Madras Export Processing Zone, and Maraimalai Nagar that are the key industrial hubs of the region.
The availability of land, proximity to the airport as well as OMR and Oragadam through connecting roads, improved connectivity through Mass Rapid Transit System and rail connectivity through Tambaram have also led to the growth of the office market here. With plans to add more social infrastructure like malls as a part of the existing integrated townships, the micro market is likely to improve.
GST Road continues to attract cost-conscious large and mid-sized IT/ITeS occupiers; the rents are expected to remain relatively lower in comparison to the other parts of the city. At present, the region has an office space inventory of 3.7 million sq. ft., the vacancy levels here are at approximately 6% with rental values ranging between INR 30-42/sq. ft. per month.
The above mentioned micro-locations have a good mix of small and large sized office spaces. Currently, additional infrastructure projects have been commissioned and are in various stages of progress, to improve connectivity within the city. The Tamil Nadu government is also working towards creating policies that will further ease conducting business in the city. These steps will consolidate Chennai’s position and maintain the status quo as a much sought-after investment hub in the short to medium term.