Chennai’s commercial office market is on track to close 2025 at a record high, with leasing activity continuing strongly despite limited supply. Net absorption has already reached a two-decade high of 5.2 million square feet on a year-to-date basis, and the city is expected to end the year with nearly 9 million square feet in gross absorption.
“We have never witnessed such activity in the last two decades, even if we compare it to the peak of 2006 and 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 for Tamil Nadu and Kerala at Cushman and Wakefield.
Major deals in the past nine months include Hitachi leasing 1.2 lakh square feet, Veli University taking 2.2 lakh square feet, TCS and LTI Mindtree office leasing 6 lakh square feet each, and Optum securing 4 lakh square feet. Schneider, iEnergizer, and Onward have also committed to large spaces.
Analysts note that while central locations like Guindy remain popular, a growing share of demand is shifting to Peripheral Business Districts. Areas such as PTR and MPR are gaining attention as preferred choices for large-scale, integrated office campuses.
A key driver of this growth is the expansion of global capability centres. “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 strong connectivity, an established education ecosystem, and competitive real estate costs compared with Bengaluru or Hyderabad,” said a senior executive of a global real estate fund.
Developers in these regions are investing in Grade-A assets with features such as sports facilities, social infrastructure, and modern amenities, which are drawing occupiers away from central districts. “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,” said Thirumal Govindraj, CEO of RMZ Office and RMZ NXT.
Recent policy changes, including the denotification of certain zones, have further boosted the market by giving developers and occupiers greater flexibility. Experts believe this will help broaden the real estate landscape beyond the traditional core city areas.
“The supply demand imbalance remains a key theme this year. While construction delays and limited new completions have created a tight pipeline, occupier appetite is rising, particularly for large modern campuses. Vacancy compression is expected in 2025 as fresh demand absorbs stock faster than it can be replaced,” said Sridhar.
Analysts expect Chennai’s office market to stay strong in the medium term, supported by GCC growth, better infrastructure, and demand for modern developments. Leasing volumes are set to reach new highs, confirming the city’s position as one of India’s most resilient and diversified office hubs.
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