News & Insights | Real estate

In the last six years, global companies have secured over 50% of the office leasing market.

Published: March 13, 2024

GCCs in Technology Engineering & Manufacturing firms dominated annual office leasing activity

Chennai emerged as the third-largest office market in absorption terms in 2023

Chennai – March 12, 2024 – The top real estate consultancy firm in India, CBRE South Asia Pvt. Ltd., released the results of its report titled “Diversification series: Rise of Chennai” today. The report claims that international businesses are expanding into Chennai at an increasing rate and that current businesses are turning to flight-to-quality leasing. Over the last six years, the city’s overall office lease share of global corporations has continuously maintained above 50%, and it is anticipated that this trend will continue in the years to come.

As more international companies establish their Global Capability Centers (GCCs), Chennai is becoming a more popular location for offices. Chennai has become a popular destination for international businesses looking to develop their global competence centers because of its large talent pool, robust manufacturing capabilities, and affordable leasing rates for high-quality office space. GCCs in the city have been made possible in large part by the abundance of colleges and institutions that offer courses in science, technology, engineering, and mathematics (STEM). The majority of areas that are used by global corporations are located in OMR Zones 1 and 2.

Over the last three years, American semiconductor manufacturing companies, oil and gas companies based in EMEA, and machinery manufacturers from both regions have been the leaders in Engineering and Manufacturing (E&M) leasing, accounting for two-thirds of all office leasing. In contrast, American financial services and investment firms, followed by domestic banks, have dominated BFSI leasing. Leasing activity in the Engineering & Manufacturing industry is expected to increase with the adoption of incentives, such as capital subsidies, training support, lower land costs, and improved quality certifications, as part of Tamil Nadu’s semiconductor and advanced electronics program, 2024. In 2023, the E&M and BFSI companies observed approximately ten office purchases that were larger than 200,000 square feet. This represents a notable rise from the one or two agreements that were regularly done in prior years.

American businesses accounted for 46% of the total office space absorbed in 2023, with domestic businesses coming in second with 34%. The study states that in 2023, the E&M (engineering and manufacturing) sector accounted for 28% of the absorption, followed by BFSI with a 22% share.

The city’s thriving industrial and manufacturing scene has encouraged companies in the semiconductor manufacturing and oil and gas exploration sectors to rent office space as they look to digitize their offerings. Global banks and financial institutions have expanded due in part to the city’s abundance of young and experienced engineers and financial experts, in addition to the E&M industry. For the past three years, banks have trailed financial services and investment organizations in terms of BFSI leasing activity, which accounts for nearly 3/4 of the total office leasing market.


In the past few years, Chennai’s office market has gained prominence, and by 2023, it will rank third in terms of office absorption. Together with its more established sister cities like Delhi-NCR, Mumbai, Bangalore, and Hyderabad, the southern city is starting to show itself as an appealing choice for occupiers. According to the research, the city saw its highest-ever leasing and a decadal-high supply in 2023, with a total absorption of 10.0 million square feet and a supply of 6.4 million square feet. Ten percent of India’s total commercial office stock is located in Chennai. There were 87 million square feet of office space in 2023. It’s interesting to know that 38% of office stock overall in the market is certified green. Several interrelated variables that have increased the city’s attractiveness and competitiveness are to blame for this change.

Chennai has seen the emergence of campus-style modern office developments in the last few years, led by the appetite of global and Indian firms for such spaces. During 2023, the city witnessed heightened new developments, offering a range of space options to occupiers, and enhancing absorption. Robust occupier confidence in the market and an integrated public transportation system within the city have resulted in well-distributed office activity across the city. The city’s OMR Zone 1 continues to be the most active micro-market, followed by OMR Zone 2. The average size of the newly completed developments more than tripled to reach 490,000 sq. ft. in 2023, compared to 146,000 sq. ft. in 2018. Furthermore, the average deal size also experienced a substantial increase, rising from 21,000 sq. ft. in 2018 to 35,000 sq. ft. in 2023.

In 2023, 30% top five developers lead the share in completed office stock- DLF, Tata Realty and Infrastructure (TRIL), Xander Group, CapitaLand and ETL Infra. In recent years, developers such as DLF, Brigade Group, CapitaLand, ETL Infra, Olympia Group, Mindspace REIT and RMZ Corp have unveiled their large-sized office developments exceeding one million sq. ft. in key micro-markets including OMR Zone 1, OMR Zone 2, MPH Road and Off CBD.

Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, said, “Chennai’s real estate market has experienced exponential growth over the past decade. Seeking to attract investment and propel job creation, the government has actively implemented sector-specific policies, significantly enhancing Chennai’s real estate landscape. Tailored initiatives for industries like engineering & manufacturing, fintech, IT, aerospace, and electronics have fueled a substantial upsurge in office space absorption during 2023. This surge positions Chennai as a key contributor to India’s overall office market, demonstrating the success of these government interventions across diverse sectors.”

Ram Chandnani, Managing Director, Advisory & Transaction Services, CBRE India, said, “Chennai’s charm as an investment destination, particularly for global and domestic manufacturing firms, is expected to drive innovation and technological advancements. With companies increasingly adopting innovative technologies such as Artificial Intelligence, SaaS, Big Data, and IoT, Chennai is positioned at the forefront of evolving trends. The growth of BFSI and E&M GCCs in Chennai is likely to enhance further reshape the city’s office real estate momentum”.

Top 5 office micro markets in Chennai

Micro market Description Office stock
Central Business District: Anna Salai, Nungambakkam, RK Salai, T Nagar and Alwarpet, etc


CBD is the city’s oldest market where over 80% of the office developments are more than a decade old. Its strategic location, well developed social and physical infrastructure and connectivity to prime residential areas contribute to its prestigious business image. ~10 msf
MPH Road: Mount Poonamallee High Road



In the last decade, this MM near Guindy in Off-CBD has emerged as a preferred commercial hub, offering quality office spaces, robust infrastructure, with over two-thirds of its office spaces sourced from SEZs, predominantly developed by DLF


~12 msf
Ambattur: Ambattur, Ambattur Industrial Estate and Padi



Despite active IT developments located in this market, this peripheral MM maintains its appeal, especially for E&M companies due to its proximity to industrial areas. ~5 msf
OMR Zone 1: Taramani to Perungudi Toll



This MM stands out as the most active in terms of both supply and absorption, boasting the lowest vacancy levels. Most of the office space in this MM caters to the IT segment, with IT parks comprising nearly 70% of the entire stock.


~25 msf
OMR Zone 2:

Perungudi toll up to Sholinganallur and Pallavaram to Thoraipakkam


Including PT Road, this MM stands as one of the most active in the city, where nearly two-third of the stock comprises of Non SEZ spaces. In the upcoming supply, this market is poised to dominate attracting a larger share and witnessing increased interest from occupiers.


~15 msf

 About CBRE Group, Inc.

CBRE Group, Inc. (NYSE: CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2023 revenue). The company has more than 130,000 employees (including Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management, property management, investment management, appraisal and valuation, property leasing, strategic consulting, property sales, mortgage services and development services.

CBRE was the first International Property Consultancy to set up an office in India in 1994. Since then, the operations have grown to include more than 11,000 professionals across 15 offices, with a presence in over 80 cities in India. As a leading international property consultancy, CBRE provides clients with a wide range of real estate solutions, including Strategic Consulting, Valuations/Appraisals, Capital Markets, Agency Services, and Project Management. The guiding principle at CBRE is to provide strategic solutions that make real estate holdings more productive and economically efficient for its clients across all service lines. Please visit our website at

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