The Tamil Nadu government has launched an initiative to address Chennai’s growing demand for office space by tapping into its land bank and partnering with private firms. The state has identified 30 prime locations near metro stations for Grade-A office space development, a move aimed at meeting the increasing needs of businesses and global capability centres (GCCs).

“Incremental office space absorption in the city is outpacing supply,” said V Arun Roy, Tamil Nadu’s Industries Secretary. Speaking to The Times of India, he emphasised the need for rapid development to sustain Chennai’s momentum as a business hub. “These locations would be developed into commercial spaces, mostly office spaces, through a special purpose vehicle between Chennai Metro Rail Limited (CMRL) and TIDCO.”

Analysts estimate that Chennai recorded a gross office space absorption of 10.8 million square feet in 2023. While similar growth is anticipated for 2024, a potential slowdown is expected in 2025 due to limited supply. To counter this, the state government’s proactive strategy seeks to unlock underutilised land for commercial use, ensuring the city remains competitive in attracting businesses.

Chennai is gaining traction as a preferred destination for GCCs, particularly in the engineering and manufacturing sectors, which accounted for 33% of leasing activity from 2022 to September 2024, according to a report by CBRE. The report also notes that GCCs in Chennai are projected to absorb up to 3.2 million square feet in 2025, slightly higher than the current year.

At the GCC Summit, Roy highlighted the state’s efforts to promote investments in global capability centres by offering competitive incentives and subsidies. “Tamil Nadu has immense potential for GCC operations, but we must acknowledge that we are behind cities like Bengaluru, Delhi-NCR, Hyderabad, and Pune in this area. This recognition is crucial for us to bridge the gap,” he said.

Roy also stated that Tamil Nadu is open to adjusting its incentive packages based on industry feedback to better meet businesses’ needs. The state aims to solidify its position as a top choice for global businesses by fostering a more flexible and responsive investment environment.

This initiative to expand office space supply underscores Tamil Nadu’s commitment to sustaining economic growth and fostering innovation. With robust infrastructure, a strong talent pool, and strategic policies, Chennai is poised to strengthen its position as a leading commercial hub in India.