GCC-oriented office transactions in Chennai touch 6.02 msf in 2023: Report

March 26, 2024: The burgeoning trend of Global Capacity Centres (GCC) focused transactions in Chennai’s commercial real estate market has taken centre stage, according to the latest report by Knight Frank India. Chennai has recorded a remarkable surge in GCC-oriented office transactions during 2023, totalling 6.02 million square foot (msf) across 71 deals. This staggering figure represents a substantial 176% year-on-year (YoY) increase, signifying the city’s growing prominence as a preferred destination for GCC operations. Of all the GCC deals observed across eight major commercial markets in India during 2023, Chennai accounted for a significant 29%, further solidifying its position in the GCC landscape. This momentum marks a significant leap from the 57 deals recorded in 2022, totalling 2.18 msf.

Delving deeper into industry-wise transactions, the report highlights the BFSI (Banking, Financial Services and Insurance) segment as the frontrunner in GCC-oriented office space transactions. Despite only six deals throughout the year, the BFSI sector contributed over 30% of GCC transactions in Chennai, leasing a substantial 1.89 msf in 2023. Following closely, the manufacturing sector emerged as the second-largest occupier of GCC business-oriented office space in Chennai’s commercial market, with transactions totalling 1.78 msf in 2023. Additionally, other service sectors recorded 26 GCC-oriented deals, representing the highest number of transactions during the same period. These findings underscore Chennai’s growing appeal as a hub for GCC operations, with diverse sectors actively participating in the city’s dynamic commercial real estate landscape.

In Q4 2023, Chennai experienced a significant surge in office transaction volume, with a total of 3.3 msf from 29 deals. This surge was particularly noteworthy, as more than half of the GCC business-oriented transactions for the entire year were recorded during this quarter. The spike in numbers can be attributed to the substantial leasing activities by three major occupiers. These transactions have accounted for a remarkable 55% of the overall GCC-oriented transactions during Q4 2023, totalling an area of 1.83 msf.

Viral Desai, senior executive director, occupier strategy and solutions, industrial and logistics, capital markets and retail agency, Knight Frank India, said, “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. The market saw a remarkable surge in the number of GCC deals across various industries, with IT, Manufacturing and other service sectors creating a vibrant tapestry of transactions. 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 commercial assets of the city favourably amongst the global occupiers looking to expand operations in the APAC region.”