Chennai office market set for 9M sq ft growth by 2026

Chennai’s commercial real estate market is entering a transformative phase. According to a recent JLL report, the city’s Grade A office market is poised to witness nearly 9 million sq ft of fresh supply between 2025 and 2026. Much of this expansion will be concentrated in Peripheral and Secondary Business Districts (OMR), which are set to contribute almost two-thirds of the upcoming stock.

Leasing Momentum Accelerates

The momentum in leasing continues to impress. Gross office leasing in Q2 2025 rose 5% quarter-on-quarter, touching 1.99 million sq ft. This brought the total for the first half of 2025 to 3.89 million sq ft—signaling a strong year ahead for Chennai’s office landscape.

The demand story is diverse: BFSI players accounted for the largest share at 38%, followed by IT/ITeS firms at 25% and co-working operators at 18%. Net absorption surged by 30% q-o-q, hitting 1.3 million sq ft, with SBD OMR and PBD OMR alone accounting for nearly 80% of Q2 activity.

New Completions and Expansions

Chennai’s skyline is expanding with notable project completions. In Q2 2025, about 1.19 million sq ft was added through five key projects—DLF Downtown Block 3, RMM Palmgrove, Casagrand Ecotech (refurbished), Olympia Crystal, and Kochar Kush. These projects added a combined 1.8 million sq ft to the city’s Grade A inventory.

What’s remarkable is that 61% of this new supply was already pre-committed, underscoring the city’s strong occupier confidence. For H1 2025, completions stood at 1.8 million sq ft, nearly matching H1 2024. Vacancy rates inched up slightly by 50 bps q-o-q to 7.2%, but still remained significantly lower by 240 bps y-o-y.

Rental Growth Trends

Rents and capital values recorded marginal increases, reflecting steady demand. The Peripheral GST corridor saw the sharpest rental growth at 9.3% year-on-year, while SBD OMR followed with 8.1%—driven by premium property launches and rental escalations in existing assets. This trend highlights the growing preference for quality workspaces in Chennai’s evolving business districts.