Chennai sees record office space demand in 2023; leasing up 61%: CBRE

Chennai has achieved an all-time high demand for office space in 2023 calendar year at 10 million square feet on better demand from corporates, according to CBRE.

Real estate consultant CBRE on Thursday said that the leasing of office space in Chennai grew 61 per cent to 10 million square feet in 2023 as against 6.2 million square feet in the previous year.

Overall, the office market across nine major cities witnessed a gross absorption of 61.6 million square feet during 2023, registering a growth of 7 per cent from 57.8 million square feet in the previous year.

This marked a 4-year high leasing activity after it touched the peak in 2019 with 65 million square feet.

BFSI (Banking, Financial Services and Insurance) firms led leasing activity with 22 per cent share in 2023, followed by technology companies (21 per cent), engineering & manufacturing companies (15 per cent), and flexible space operators (14 per cent), the consultant highlighted.

"In 2023, the global economy, while grappling with monetary tightening and geopolitical challenges, fared better than expected," Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa at CBRE, said.

Most major economies managed to avoid a recession, while the Indian economy continued demonstrating resilience in the year gone by, he said.

Magazine expects the Indian economy to exhibit similar resilience in 2024 as well, led by strong domestic growth and sustained capital expenditure.

"The office sector also performed better than expected, with many occupiers finalising deals in the second half of the year," he said.

Driven by steady momentum in enquiries, Magazine said the demand is likely to remain largely stable during the first half of 2024.

"However, we expect demand to pick up momentum during H2 2024, led by clearer visibility of the global macroeconomic situation and an uptick in the global information technology (IT) services sector," he said.

As per the data of 2023 versus that of 2022, the leasing of office space in Delhi-NCR declined to 9.5 million square feet from 11.4 million square feet.

In Mumbai, office space absorption grew to 8.5 million square feet from 7.3 million square feet.

Bengaluru saw a decline in demand at 15.3 million square feet from 16.7 million square feet.

In Hyderabad, the leasing of office space rose to 10.1 million square feet from 7.4 million square feet.

The office space demand in Pune climbed to 6.3 million square feet from 5.6 million square feet.

Kolkata saw a slight fall to 1.2 million square feet from 1.3 million square feet, while Ahmedabad witnessed a sharp dip to 0.5 million square feet from 1.6 million square feet.

In Kochi, the demand for office space remained flat during last year at 0.3 million square feet.