Chennai’s commercial real estate sector is on a strong growth path, with projections indicating it will cross the 100 million square feet mark by 2026. A mix of growing occupier demand, steady private equity investments, and ongoing infrastructure developments are fueling this momentum.

Over the last two years, the city has attracted a notable USD 1.19 billion in private equity flows—solidifying its status as a key investment hub. Driving much of this growth is the city’s competitive talent pool. “Chennai offers talented and young manpower at competitive rates, which attracts global companies to set up operations here,” said Karun Verma, senior executive director at DLF Cyber City Developers Limited.

Sectors like IT, BFSI, and life sciences continue to view Chennai as a preferred destination, particularly in micro-markets like Porur, Tharamani, and OMR. These areas have strong interest due to better connectivity and evolving business infrastructure. In Q4 2024 alone, net absorption rose 102%, totalling 1.1 million sq ft, while rental values grew 3.8% year-on-year.

“Year-on-year growth of 8-10 per cent in rental rates reflects investor confidence in the market,” Verma noted, underlining the resilience of Chennai’s office space market. This steady rise in rental rates and demand indicates a sustained investor appetite, especially in Grade-A office spaces.

The rise of coworking spaces is playing a significant role in this story. Ajit Kumar Chordia, past president of CREDAI Chennai, highlighted that “coworking companies, along with GCC, IT, and ITeS companies, are driving the demand.” Nearly 25% of new commercial space is being occupied by coworking providers. Even smaller businesses are shifting to these flexible spaces, seeking better quality and reduced operational hassle.

Supporting this commercial boom are large-scale infrastructure projects like the upcoming Greenfield Airport at Parandur and the Phase 2 expansion of the Chennai Metro. Additional developments like Central Square and the Chennai-Bengaluru Industrial Corridor are expected to enhance regional connectivity and boost economic activity.

Chordia also pointed to the rising competition within the city, noting, “Chennai at present has a reasonable cost of real estate rentals, but the high cost of land and limited supply are driving up rentals.” Despite a 30% dip in new office supply in 2024, absorption remained strong at 5 million sq ft—up 31% from the previous year. Grade-A rents saw a notable jump, with Anna Salai leading at Rs 88 per sq ft and RK Salai close behind at Rs 83 per sq ft.

With robust demand, a growing coworking footprint, and strong fundamentals, Chennai is well-positioned to remain a leading commercial hub in India’s office space landscape.