• The Times of India
  Title : Tech companies lap up 12.55L sqft office space in Chennai
  Author : Rajesh C
  Location : Chennai
  Article Date : 09/09/2020

  CHENNAI: While some tech companies are surrendering their office spaces partially or wholly, some others including financial services giant BNY and global electronics company KLA Tencor have signed up real estate deals during the lockdown to enhance their city presence. Between April and August when the city was either fully or partially locked down due to Covid-19, more than 12.55 lakh square feet of office space has been lapped up, mostly by tech companies.

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  While Omega Healthcare signed up for 41,000 square feet at Chennai One IT park, banking giant BNY pocketed 6.25 lakh square feet space at Embassy. Desi payments company NPCI and Nine Stars, too, joined the space hunt, sources said. BNY did not respond to a TOI questionnaire, but sources confirmed the deal,

  “These are encouraging deals in the city. The companies, though mandated before the pandemic, decided to go ahead with the transactions, indicating their keenness to expand or set up operations in the city,” said Srinivas Anikipatti, senior director at real estate consultancy Knight Frank.

“While companies were talking about cost saving and productivity improvements due to work from home (WFH), creativity appears to have taken a back seat, our clients tell us,” he said.

Real estate industry sources said that WFH is effective when it’s training related, but when its R&D or manufacturing design, collaboration with colleagues enhances quality. “Cost saving is from productivity and not quality. We will get to see return to campuses or a hybrid model. This full WFH may not work in the long run” sources said. “These deals indicate that there is nothing to panic, as earlier thought. Since January nearly 2.2 million square feet has been absorbed and we may end 2020 with 4.2 to 4.3 million square feet. (In 2019 Chennai absorbed 5.8 million square feet) ,” said Rajesh Babu, Chief Consultant, at real estate consultancy Asset Advise.

• The Times of India
  Title : Commercial real estate bounces back in Chennai
  Author : Rajesh C
  Location : Chennai
  Article Date : 12/12/2019

  CHENNAI: After than 6 years, real estate activity has picked up momentum in Chennai, taking the overall absorption of commercial space to nearly 60 lakh square feet. The hectic activity in real estate is because traditional businesses have increased their footprint in the city.

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  From software services to co-working spaces and the resurrection of electronics manufacturing services (Foxconn, Salcomp), all have contributed in pushing up real estate activity. Rentals too have witnessed a 10 to 15% rise and the bullishness could continue for the next 2-3 years, experts said.

  Chennai has traditionally been a market that absorbs around 45 lakh square feet of office space. The city suddenly witnessed a spike in offtake. "The underlying sentiment has turned bullish," said Srinivas Anikapatti, senior director at real estate consultancy Knight Frank. "This year has been very good after the damp squib in 2017 and 2018," he said.

  Among the top transactions include Cognizant’s 6.2 lakh square feet in Ozone Techno Park on OMR, Infosys signing up 2.20 lakh square feet in Pacifica IT Park on OMR and Accenture signing up 2 lakh square feet in Embassy IT Park on Pallavaram Link road.

  "This is the best since 2012-13 and this year has been extremely good for the city. This has happened on the back of robust demand and the indications are that 2020 will also be a good year," said Kanchana Krishnan, senior director for Chennai at property consultants JLL India.

The new darlings in the real estate horizon, co-working spaces, have lapped up substantial spaces in business hubs. For example, Workafella signed up 1.42 lakh square feet in Teynampet. The growth in this segment could give a leg-up to start-ups in the city.

"The city traditionally was short on supply on good quality office space. But quality office space is now available," Anikapatti said. Along with the new developments, opportunities for rentals across various price points starting from `45 per square foot to `110 per square foot is now available — a feature which had earlier weaned away investments from Chennai to Bengaluru and Hyderabad.

"We are witnessing the first years of a boom cycle returning. We estimate the market will be good for the next 3 years at least as there is a significant interest from industrial segment," said Rajesh Babu, director, Asset Advise, real estate consultants.

The drivers of the boom are the city’s traditional vanguards, IT & ITES, captive centres for large transnationals, co-working spaces and the re-churn driven by Foxconn, Salcomp and other smartphone makers.

• The Times of India
  Title : 12-acre Pallavaram plot bought for ₹250cr, to become IT park
  Author : Rajesh C
  Location : Chennai
  Article Date : 25/12/2018

Alwarpet Hall Fetches ₹150 Cr From Hotelier

Two blockbuster land deals, for an integrated IT park and a luxury hotel, has catalysed real estate in the city in recent weeks.

Singapore-based Ascendas purchased 12.74 acres for nearly ₹250 crore on Pallavaram Radial Road and a city hotelier picked up Gokul Kalyana Mandapam in Alwarpet for nearly ₹150 crore.

This is the fifth investment of Ascendas in the city. The group, it is learned, is to promote a 2.3 million sqft IT park which upon completion is expected to suck in ₹1,500 crore investment.

The Indian arm of the Singapore firm has taken over G Square Zamin Private Ltd., which owns the land parcel. G Square group is a prominent land aggregator and has worked with companies including CEAT, Murugappa group, TVS and other leading corporates helping them acquire lands for their projects. The company that Ascendas acquired aggregated and acquired the lands, partly bank rolled by Piramal group for nearly ₹140 crore.

“We are not in a position to comment,” an Ascendas spokesperson told TOI a few days ago, while G Square could not be reached for a comment.

Ascendas already manages an IT park in Taramani, a logistics hub in Oragadam, an integrated township near Mahabalipuram and another IT park in Mahindra City.

Gokul Kalyana Mantap on CP Ramaswamy Road in Alwarpet has been acquired by hotelier Vikram Aggarwal for nearly ₹150 crore. The land parcel, nearly 30 grounds, (one ground is 2,400 square feet) will pave way for a hotel. Aggarwal owns Radisson Blu hotel in Egmore and a beach resort, Fortune Select Palms, on the East Coast Road.

Asked about the deal, Aggarwal, who is out of the country, texted, “please allow us some time, we will get in touch with you”. He did not elaborate

Lack of quality office space for both IT and commercial sectors has been a cause of concern for the industry in Chennai. For example, while Bangalore consumed 11.7 million sqft of office space in 2017, Chennai touched just 4.5 million sqft, according to a Knight Frank report.

“There is a shortfall in quality IT space supply in key micro markets including those within city limits. The resultant impact is reduced absorption. For example, this year, the industry absorbed just 3.4 million sqft of space as against 4.5 million last year,” said S Ramaswamy, senior consultant Asset Advise. The demand for large-sized quality tech space is high but supply is very few, he added. Fresh supply is expected in Chennai only by mid-2020.

• The Times of India
  Title : GE checks into city, to set up 1.7 lakh sqft back office on OMR
  Author : Rajesh C
  Location : Chennai
  Article Date : 07/01/2017

Engineering and technology giant GE is setting up shop in Chennai. The Fairfield-Connecticut headquartered company will set up a back office and processing centre across 1.7 lakh square feet at Ramanujam IT Park in Taramani.

“GE signed for space a few weeks ago. They want to set up a back office and processing centre,“ sources said. GE could not be reached for comment. According to industry benchmarks, a back office usually allocates 50-60 square feet space per employee and 100 sqft for software development work. “ A 1.7 lakh sqft transaction should be encouraging,“ sources said.

Chennai is witnessing shortage of quality office space. Notwithstanding this, office space absorption levels in the city rose to 5.25 million sqft in 2016, from 5 million sqft in 2015.“Despite shortage of supply , the increased volume of absorption is encouraging. It gives the confidence that the supplies in the next 12 to 18 months too will get absorbed. We can expect a positive rub-off of this to retail and residential sectors,“ said S Ramaswamy , director, Asset Advise, real estate consultants. Mirroring the strong de mand coupled with short supply , rentals too have witnessed a 12-15% rise depending on the micro market. “We anticipated the city to absorb only 4 to 4.5 million sqft. The strong demand leading to higher absorption levels. Rentals too, are on the rise. For example, at Navalur on the OMR, the rentals are nearly Rs 28sqft foot from Rs 24sqft a year ago,“ said Kanchana Krishnan, director Chennai at Knight Frank, real estate consultants.

Office space rentals at OMR before Toll Plaza was now quoting at Rs 50 to 55 sqft, up 12 to 15% from 2015, said Ramaswamy .

Industry insiders said that 2016 was a year of consolidation and expansion. “Despite political uncertainty due to elections earlier in the year; later the death of chief minister of Jayalalithaa and also cyclone Vardah, the real estate market rallied in Chennai,“ sources said.

Among the top deals in the year, Accenture consoli dated its operations adding 2.8 lakh sqft in Divyashree IT park on OMR, Infoview signed up 1.8 lakh sqft in Price Info on OMR, Renault Nissan R&D centre took 1.8 lakh sqft in Ascendas park at Mahindra City near Chengleput.

Guiding to a tepid 2017, Knight Frank´s Krishnan said, “We do not expect big transactions this year as supply side issues still persist. However, we expect these to even out next year when we will see nice properties coming into the market.“

• The Times of India
  Title : Real estate rentals on the rise
  Author : Rajesh C
  Location : Chennai
  Article Date : 10/16/2016

Shortage in supply of office space has resulted in reduced absorption and higher real estate rentals in Chennai. For the period from January to September this year, deals for nearly 3.3 million square feet have been signed, down from 3.7 million a year ago. Rentals have, however, shot up by nearly 10% year-on-year.

The city´s real estate market is largely driven by captive back office operations of large corporations, mostly in the financial services vertical. In any given year, the city absorbs nearly 4.3 million square feet of office space.The interest for quality office space remains strong, but we are hamstrung by the absence of supply," said S Ramaswamy, director of real estate consultancy Asset Advise. "Several existing and new players have signed up mandates for expansion here, while we wait for supply to get in."

With quality office space supplies hitting the nadir, rentals are rising. "Between Q2 (April-June) and Q3 (July-September) there is a 5% increase in rentals," said V S Sridhar, managing director (Chennai market) of international property consultants Cushman & Wakefield."The important part of the story is the net absorption which is positive," he said. Net absorption is the new deals signed instead of the same client moving from one location to another. "70% of all deals this year is fresh deals," he said.

Among the top deals in the JulySeptember quarter are GE signing up for two lakh sq ft in Ramanujan City (in Taramani), World Bank and e-tailer Amazon signing up for 70,000 sq ft each at SP Infocity in Perungudi and Freshdesk adding another 80,000 sq ft at SP Infocity.

"Certain micromarkets are witnessing good appreciation in rentals. For example, for IT spaces in Sholinganallur and beyond rentals are now nearly ´28 a square foot from ´24 earlier," said Kanchana Krishnan, director (Chennai) at property consultants Knight Frank India. "The pipeline is strong. Deals will get inked when fresh supplies start coming in," she added.

Indicative rentals at OMR (upto toll plaza) which were between ´50 to ´65 have now risen to a minimum ´60. Central business district rentals have risen to nearly ´80 a square foot from ´75 a square foot, industry sources said. At the current rate, real estate industry sources have guided to a 4.5 million square feet of absorption for 2016 compared to 5.2 million square feet in 2015.

• The Times of India
  Title : Office Rental Rates in space-short Chennai go through the Roof
  Author : Rajesh C
  Location : Chennai
  Article Date : 11/04/2016

Lack of high quality office space is pushing up rentals in key business districts across the city . Rentals are up between 10% and 12% over the past two quarters,in prime locations like the Ramanujam IT Park, Ascendas and other prominent business destinations. Chennai´s real estate market attracts 4.5 and 5 million square feet worth deals every year. The city was perceived to have excess office space inventory till 2013-14. Upon stoppage of additional office space, the inventory has reduced sharply .“There is a genuine shortage of office space,“ said the director of real estate advisory Asset Advise S Ramaswamy .“Since the stock of quality space is coming down and the supply is also in the lower side, rentals are expected to firm up in the medium term,“ he said. With restricted or little supply , rentals have already started to head north. “We have transacted business at Ascendas IT park at nearly `65 a square foot, which is nearly 8% higher while in Ramanujam IT Park it´s Rs 80 to Rs 85 a square foot from Rs 70 to Rs 75 earlier,“ said director of Chennai region Kanchana Krishnan at consultancy Knight Frank. In RMZ IT Park deals are now getting inked at near ly Rs 56 a square foot as against Rs 49 earlier. Part of the reason, which the developers and real estate consultants attribute is the shift that city witnessed from commercial to residential.“For a good three years now, developers chased residential buyers and flooded the market with apartments giving the commercial and IT space a miss. That is coming to haunt the industry now,“ an industry official said. The deal pipeline too appears robust. “The market is buzzing. There are request for quotations from Wells Fargo, Cap Gemini, Scope International, IBM and CSC. But the availability is the issue,“ the industry source said. “Outlook looks good from a demand standpoint, but bad from supply side,“ Ramaswamy said. Office space absorption too has slackened during the past quarter. During “January March 2016, deals were completed for nearly 8 lakh square feet as against one million square feet a year ago.“January March 2015 was an aberration as a lot of pending deals were completed then.That said, the future appears strong from demand pipeline,“ Knight Frank´s Krishnan said. For a city which is limping away from disastrous floods last December, the expansion programme of several top notch companies is welcome.“Rentals are rising in centrals parts of the city and upto Karapakkam on the OMR.By end year, all existing supplies will dry up which will force developers to pour more concrete into projects,“ she said.