Chennai prime office market to see 9m sq ft of new supply until 2026

Tech firms are expected to drive net absorption.

In a recent report, JLL said the Chennai Grade A office market is anticipated to see around 9 million sq ft of new supply for the 2025-2026 period, with PBD OMR and SBD projected to contribute two-thirds of this total.

“Robust demand driven by GCCs within the technology, manufacturing/engineering, and BFSI sectors, as well as flex and technology firms is expected to support an increase in net absorption levels,” the report said.

Here’s more from JLL:

Gross office leasing rose 5% q-o-q in Q2 2025 to 1.99 million sq ft, fueled by strong occupier demand. This pushed H1 2025 leasing to 3.89 million sq ft, signaling a robust year for the office market.

Demand was driven by BFSI with a 38% share, followed by IT/ITeS with 25% and Co-working providers with 18%. Net absorption jumped by 30% q-o-q to 1.3 mn sqft, with SBD OMR and PBD OMR submarkets together accounting for 80% of Q2 figures.

Completions in Q2 total 1.19 million sq ft

Five projects including DLF Downtown Block 3, RMM Palmgrove, Casagrand Ecotech-refurbished, Olympia Crystal and Kochar Kush across all major submarkets combined to add 1.8 million sq ft to the city’s Grade A stock.

In Q2 2025, 61% of the new supply was pre-committed. New supply for H1 2025 totalled 1.8 million sq ft, near similar to H1 2024. City vacancy rates rose 50 bps q-o-q to 7.2%, but was still lower by 240 bps y-o-y.

Rents and Capital values rose marginally q-o-q

PBD GST saw the highest rent growth in Q2 2025 at 9.3% Y-o-Y. SBD OMR rents increased 8.1% Y-o-Y, driven by new premium properties and rental hikes in existing quality assets.

Capital values rose as well, growing at 3.2% y-o-y and in line with rents. Consequently, yields remained unchanged.