About 17 mn sq ft of Supply Likely to be Added to the Inventory Over 2018-2021: Colliers International India(09:00 Hrs. IST)
CHENNAI, November 19, 2018 /PRNewswire/ --
Demand in Chennai slowed with year to date (YTD) absorption declining 13% YoY in Q3 2018. However, the year should close at levels similar to 2017 as many leasing deals are expected to close in Q4 2018. The third quarter saw leasing of about 760,000 sq ft leading to YTD 2018 absorption of 2,800,000 sq ft. The YTD gross absorption declined 13% in comparison to the same period in 2017. Although the average deal size has increased in Q3, the fall in number of transactions has brought down the leasing volume. However, it is expected the number of deals will increase in Q4 owing to steady enquiries by occupiers.
"Office space demand continues to be robust in Chennai and as anticipated, the city is beginning to show better traction in the 'post toll' OMR market. It is also very encouraging to see co-working operators establishing large scale operations in Chennai. With reducing vacancies across most micro markets, rentals are expected to increase over the short-to- medium term," says Shaju Thomas, Director, Office Services (Chennai) at Colliers International India.
The office demand in the city is moving towards micromarkets such as Old Mahabalipuram Road (OMR) Post-Toll and Mount Poonamalle High (MPH) Road with these micromarkets constituting 41% and 23% of the total office leasing respectively in Q3 2018. The Off Central Business District (Off CBD) and the CBD contributed 20% and 11% of the demand respectively while OMR Pre-Toll accounted for 5%.
In line with earlier forecasts, companies in the engineering and manufacturing sector started gaining momentum, accounting for 31% of the total demand in Q3 2018. The Information Technology and Information Technology enabled Services (IT/ITeS) sector represented 28% of total demand, education services (12%), marketing & advertising (10%), banking, financial services and insurance companies (8%), flexible workspace operators (4%) and other sectors represented 7% of the demand.
The availability of quality contiguous floor plates has led occupiers looking to expand to consider the OMR Post-Toll micromarket. Over the next three years, occupiers looking for proximity to the city's core locations are likely to consider the Off CBD and MPH Road micromarkets owing to the ease of connectivity and upcoming Grade A supply.
Over the first nine months of 2018, the city has witnessed completions of 1.24 million sq ft of Grade A office supply. The additional supply is expected to reach 17 million sq ft over 2018-2021, increasing the total office stock by 30%. The upcoming supply is distributed across micromarkets with OMR Post-Toll accounting for 52%, OMR Pre-Toll 26%, MPH Road 17%, CBD 3% and Off CBD 2%.
About Colliers International Group Inc.
Colliers International Group Inc. (NASDAQ: CIGI) (TSX: CIGI) is a top tier global real estate services and investment management company operating in 69 countries with a workforce of more than 13,000 professionals. Colliers is the fastest-growing publicly listed global real estate services and investment management company, with 2017 corporate revenues of $2.3 billion ($2.7 billion including affiliates). With an enterprising culture and significant employee ownership and control, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide, and through its investment management services platform, has more than $25 billion of assets under management from the world's most respected institutional real estate investors.
Colliers professionals think differently, share great ideas and offer thoughtful and innovative advice to accelerate the success of its clients. Colliers has been ranked among the top 100 global outsourcing firms by the International Association of Outsourcing Professionals for 13 consecutive years, more than any other real estate services firm. Colliers is ranked the number one property manager in the world by Commercial Property Executive for two years in a row.
Colliers is led by an experienced leadership team with significant equity ownership and a proven record of delivering more than 20% annualized returns for shareholders, over more than 20 years.
For the latest news from Colliers India, visit www.colliers.com/en-gb/india. To follow us on twitter, simply click on this twitter handle @Colliersintlind and to follow us on LinkedIn, simply click here.
For further information, please contact:
Sukanya Dasgupta, General Manager
Marketing & Communications
Colliers International India
Phone: +91-9811867682/ +91-8826377335