Chennai's GCC office space transactions surge 176% in 2023

Chennai's commercial realty rise: The commercial real estate market in Chennai witnessed a surge in Global Capacity Centres (GCC) focused transactions during 2023. The total area transacted for GCC-oriented office spaces reached 6.02 million sq ft across 71 deals, marking a substantial 176 per cent year-on-year (YoY) increase, according to a report by Knight Frank.

BFSI leads, manufacturing follows

Amongst these, the Banking, Financial Services, and Insurance (BFSI) segment emerged as a frontrunner, despite contributing to only six deals throughout the year. Surprisingly, the BFSI sector accounted for over 30 per cent of GCC transactions in Chennai, leasing a substantial 1.89 million sq ft of office space.

The manufacturing followed closely in Chennai's GCC-oriented transactions, securing the second-largest share with transactions totalling 1.78 million sq ft in 19 deals. Additionally, other service sectors actively participated in the city's commercial real estate market, recording 26 GCC-oriented deals during the same period, accounting for 1.63 million sq ft.

Q4 office surge

The surge in office transaction volume was particularly notable in the fourth quarter of 2023, where Chennai experienced a total of 3.3 million sq ft transacted across 29 deals. This quarter alone accounted for more than half of the GCC-oriented transactions for the entire year, highlighting the city's growing appeal for global occupiers.

Chennai's investor appeal

Viral Desai, Senior Executive Director, Knight Frank India, stressed the importance of Chennai's economic strength and favourable occupancy costs in attracting global investors, particularly highlighting the impact of the Tamil Nadu R&D Policy 2022.

“GCCs dominated as an end-user occupier profile, accounting for more than half of the office volume transactions in Chennai during the year 2023. Tamil Nadu R&D Policy 2022 has meaningfully aided in accentuating GCC investments in the state, especially Chennai," Desai said.

"Notably, BFSI emerged as the leader of the market, commanding the highest GCC transacted volumes in the city. Chennai’s relative economic strength and relatively low occupancy cost positions the commercial assets of the city favourably amongst global occupiers looking to expand operations in the APAC region,” Desai added.