Office space absorption in Chennai to be lower in 2013
According to real estate experts, the office space absorption within the city of Chennai, which had been witnessing a slow down in absorption in the first half of this year, is anticipated to witness a gross absorption of 3.6 million square feet in the fiscal of 2013 as against the average absorption level of around 4 million square feet every year.
The city’s residential real estate sector has also been observing the purchase of prime land parcels amounting to the tune of Rs 1,500 crore by developers during the last six months.
A below average absorption of around one million square feet has been marked by the first half of the year. However, with a multitude of huge transactions in the pipeline, the second half of 2013 is expected to compensate for the first half’s slowdown.
The demand for office space has been attracted by certain areas, while other areas have not seen significant uptake by the customers. Currently, the office space vacancy is around 25 per cent. Although, the levels of vacancy are thin compared to preferred locations such as Guindy, Mount-Poonamallee Road and pre-toll OMR.
During the last year, rentals within these preferred locations had risen by almost five to ten per cent. Industry experts believe that increased supply of office spaces has been observed by some of these locations.
The demand for grade-A office stock in Chennai has witnessed a growth from 3.6 million square feet in 2003 to 51.2 million square feet in 2013. IT and IT-enabled services sectors are mainly responsible for driving the demands up. Major developers such as DLF, Prestige, Shapoorji Pallonji and Tata Realty, etc have upcoming and few completed projects.
