Chennai Office Leasing Hits Five-Quarter High in Q1 2025: Colliers

Chennai saw its best office leasing quarter in more than one year, as 2.9 million sq ft of space was leased in Q1 2025 the highest in five quarters reports Colliers India’s Office Snapshot: Q1 2025.

Almost 60% of the demand was from the Pallavaram-Thoraipakkam Road (PTR) and Old Mahabalipuram Road (OMR Zone 2) micro-markets. Leasing of flex space alone grew to 0.3 million sq ft, more than three times the volume logged during the same period last year.

The report mentions notable deals, such as Tata Consultancy Services leasing 690,000 sq ft in Ozone Tech Park on OMR Zone 2, Walmart occupying 465,400 sq ft in CapitaLand ITPC at Radial Road in PTR, and State Street holding 202,000 sq ft in the same CapitaLand ITPC campus.

With robust demand and constrained supply, vacancy rates in Chennai fell by 300 basis points year-on-year during Q1 2025.

Domestically, office leasing in India’s seven prime cities totalled 15.9 million sq ft in the March quarter — a 15% year-on-year increase. Bengaluru and Delhi NCR contributed almost half of this activity. Delhi NCR posted its highest quarterly leasing in the last 10 quarters, while Chennai saw a 93% year-on-year increase.

New office supply across India stood at 9.9 million sq ft, comparable to Q1 2024. Bengaluru and Delhi NCR contributed two-thirds of the new stock, while nearly 90% of the supply was concentrated in Bengaluru, Delhi NCR, and Pune.

With demand exceeding new supply in most markets, average office rentals rose 8% year-on-year in Q1 2025.

The technology sector led the demand, leasing 4.4 million sq ft of conventional office space, 28% of the total. The BFSI and Engineering & Manufacturing sectors followed, together accounting for 36% of total space uptake at 3.4 million sq ft and 2.4 million sq. ft, respectively.