Prior to the IT boom in the early 2000s, Chennai’s economic activity was primarily driven by trading, port-centric businesses, and the engineering and manufacturing sectors.
Chennai was one among the first few cities to tap the potential of the technology sector in India. The IT/ITeS sector kicked off in Chennai with the completion of the TIDEL park in Rajiv Gandhi Salai(erstwhile Old Mahabalipuram Road or OMR) in the year 2000.
The commencement of SIPCOT, Siruseri and ELCOT, Sholinganallur, availability of large parcels of land at competitive rates and also a swift approval process led to a large number of private players to establish IT parks and SEZ developments
All this led to a period of formidable growth for Chennai with the total available space growing at almost 15% from 2005 to reach close to 70 million square feet in the year 2019.
2019 was a landmark year for Chennai when it saw a YoY rise of 56% in office space absorption. The overall absorption in 2019 was more than 6 million square feet and 55% of it was from the IT/ITeS sector. An interesting aspect is that there were robust contributions from peripheral markets such as Ambattur and post toll OMR. All this saw the year 2019 ended on a record high
Also over the past couple of years, the city has witnessed launch of several new-age offices loaded with amenities meeting international standards. A majority of these projects have been launched in markets such as OMR, off-CBD, and Mount Poonamallee road. Interestingly these were the markets that contributed to 75% of office spaces in the last 2 years. Also apart from traditional occupiers such a technology and BFSI, the city also has witnessed a few new-age occupiers such as e-commerce and Global Inhouse centres.
The city is also expected to see close to 20 million square feet of supply in the next 2-3 years, which is 25% of the existing stock. A majority of these are in the preferred micro-market of OMR
As IT/ITeS activity in the city grows, it will continue to aid the growth momentum in residential real estate.
Also unlike Bengaluru and Hyderabad which a predominantly dependent on IT/ITeS sectors to sustain commercial demand, Chennai as a market not just depends on the IT sector but also manufacturing and BFSI sectors and this results in it being a comparatively stable commercial market.