For Chennai office market, the year 2011 had proved to be the most successful period post the economic recession. Signs of economic recovery in the country soared the market sentiments and witnessed considerable absorption of 4.5 mn.sq.ft
The Chennai office market in 2013 struggled to survive amidst the gloomy economic predicaments in the country. Weak market sentiments and poor GDP growth projections put forth a bleak outlook for the city's office market in 2013. The IT/ITeS sector, responsible for championing Chennai's office market in the recent years, as well as the traditional economic drivers such as the manufacturing industry, had taken a pause owing to the global economic turmoil. Developers, who were buoyant about their office projects in the mid-2000s took cue from this and accordingly constricted their supply trajectory and growth plans, so much so that the city did not see any significant launch in 2012 and 2013.
Mid-2013, the expectation of the market was that the city would close the year with around 3 mn.sq.ft of office space transactions. Nevertheless, despite such negative market sentiments, Chennai managed to garner an absorption of 3.5 mn.sq.ft. in 2013, a drop of around 15% from the previous year but substantially exceeding the market expectation. This depicts the strength of the city's office market that currently boasts of around 54 mn.sq.ft. of operational space. Chennai has a resilient Central Business District (CBD), comprising micro-markets such as Nungambakkam and Anna Salai while the neighbouring locations of Egmore and T Nagar make up the Off-CBD market. The Suburban Business District (SBD) in Chennai ncompasses locations like Adyar, Guindy and Mount Poonamallee Road as well as the pre-toll gate part of the Old Mahabalipuram Road (OMR). The OMR, further down the toll gate, becomes a part of the Peripheral Business District (PBD). Besides the OMR, micro-markets like Ambattur and GST Road form the PBD of the city.
For Chennai office market, the year 2011 had proved to be the most successful period post the economic recession. Signs of economic recovery in the country soared the market sentiments and it witnessed considerable absorption of 4.5 mn.sq.ft., translating to an increase of 45% over the absorption in the preceding year 2010. However, the momentum could not be maintained in 2012 due to the delay in global economic recovery and downward trend in the growth of the Indian economy, thereby leading to a decline in absorption by 9%. The year 2013 was expected to be a period of tough challenges, yet factors such as positive traction in the IT/ITeS sector aided in restricting the decline in absorption to 15% over the absorption in 2012. Given the present economic conditions and the state of prime office markets in the country, the lower level of absorption in 2013 comes as no surprise and reveals the cautiousness in the market.
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