Riding on Tamil Nadu’s ambitious goal of becoming a one trillion dollar economy, Chennai is witnessing a surge in demand for office space, particularly from global corporations. Investments are pouring into the city, driving high demand for flexible office spaces. According to a recent CBRE report, from April to June 2024 alone, flexi-space operators have leased 0.7 million square feet of office space in Chennai.

“There has been a huge demand for office space in the city because flexi-space operators occupy as much as 40% of the leased-out office space in Chennai alone. This is the next big thing in the realty sector. Global corporations are cutting down on capital expenditure (CAPEX), long-term expenditure on office space, and are looking at operating expenses (OPEX),” says Srinivas Akinipatti, senior director for Tamil Nadu and Kerala at Knight Frank India.

Typically, setting up an office in Chennai requires leasing space for over six months before moving in. However, flexi-office space operators who lease office space from landlords can provide global clients with ready-to-use offices in 70 to 75 days.

Vaibhav Joshi, executive director at Table Space, a managed office firm, highlighted the increasing demand from global engineering firms, SaaS companies, and IT businesses to establish their Global Capability Centres (GCCs) in Chennai. “Table Space has expanded its portfolio in Chennai almost five times in the past year. We grew from 120,000 sq. ft with one asset at KRC Commerzone to 800,000 sq. ft across two new properties—Mapletree Global Infocity Park and DLF Downtown Taramani. This rental commitment is worth approximately ₹500 crore across all three properties over the next five years. In Chennai, we have over 20 clients that have taken space from us so far,” he added.

Flexi-space operators focus on two main micro markets in Chennai: the Old Mahabalipuram Road (OMR) and Guindy. With approximately 28 million sq. ft of office space, OMR is the largest and most preferred micro market for IT companies. Though more minor, with only 1.1 million sq. ft of office space, Guindy remains one of Chennai’s most sought-after micro markets.

This trend of leasing flexible office spaces reflects a shift in corporate strategies. Companies increasingly favour operational expenses over capital expenditure, finding value in flexible office spaces’ agility and cost-efficiency. This approach reduces long-term commitments and allows for quicker and more efficient office setups.

As Chennai continues to attract global investments and the demand for flexible workspaces rises, the city is poised to become a significant hub for global corporations looking to optimise their office operations. This evolution in the office space sector is set to contribute significantly to Chennai’s economic growth and its position in the global business landscape.