Chennai net leasing to scale two decade high in 2025

Chennai’s commercial office market is on course to end 2025 on a historic high, with leasing momentum showing no signs of slowing down despite tight supply conditions. The office space leasing activity has already touched two-decade high of 5.2 mn sqft net absorption on a year-to-date (YTD) basis, and the city is poised to close the year with nearly 9 million sft in gross absorption.

“We have never witnessed such activity in the last two decades, even if we compare it to the peak of 2006-2007. This leasing wave reflects a combination of robust occupier demand, strategic expansion by global companies, and a shift toward high-quality campuses in both core and peripheral markets,” said Sridhar Srinivasan executive MD (Tamil Nadu and Kerala), Cushman and Wakefield.

Some of the large deals either leased or pre committed in the last nine months includes Hitachi leasing 1.2 lakh sqft, Veli University taking up 2.2 lakh sqft, TCS and LTI Mindtree have also leased 6 lakh sqft each, and Optum has taken 4 lakh sqft. While companies like Schneider, iEnergizer, and Onward have already committed to significant space too.

Analysts highlight that while central zones like Guindy continue to attract strong absorption, a significant portion of the current momentum is also coming from Peripheral Business Districts (PBDs). Locations like PTR and MPR are now emerging as preferred destinations for tenants seeking large-scale, integrated campuses.

Another major factor fuelling the leasing surge is the continued expansion of Global Capability Centres (GCCs). With multinational corporations increasingly viewing India as a core component of their global operations strategy.

“Chennai is witnessing a steady inflow of GCC mandates, particularly in technology, engineering, and business process management functions. These transactions underscore Chennai’s attractiveness as a talent hub with robust connectivity, a strong educational ecosystem, and competitive real estate costs when compared with peers like Bengaluru or Hyderabad,” said a senior executive of a global real estate fund.

Developers in these areas have invested in high-quality assets with unique value propositions—such as dedicated sports arenas, ample social infrastructure, and advanced amenities—drawing occupiers away from constrained core city markets.

“The rapid leasing uptake in PBDs has, in several cases, outpaced available supply, reflecting the intense demand for modern Grade-A spaces. The changing dynamic is reshaping the city’s office market by decentralising demand from the established central districts to newer hubs that can accommodate large-scale growth,” said Thirumal Govindraj, CEO, RMZ Office and RMZ NXT.

In addition to corporate growth drivers, recent policy shifts have also provided a tailwind to the leasing market. The denotification of certain zones has unlocked greater flexibility for developers and occupiers, enabling faster decision-making and supporting the expansion of rental activity. Market experts believe these interventions have created additional headroom for growth, especially in areas just outside Chennai’s traditional core, thereby broadening the city’s real estate landscape.

“The supply demand imbalance remains a key theme this year. While construction delays and limited new project completions have created a constrained pipeline, occupier appetite continues to rise, particularly for high-quality, large-floorplate campuses. Vacancy compression is expected in 2025 as fresh demand absorbs available stock more quickly than it can be replenished,” said Sridhar.

Industry analysts expect Chennai’s commercial office market to remain buoyant in the medium term, powered by sustained GCC demand, improving infrastructure, and the shifting preferences of occupiers toward modern, amenity-centric developments. With leasing volumes set to scale a new peak, the city is firmly positioning itself as one of India’s most resilient and diversified office markets.