Massive investments in the software sector, complimented by flourishing manufacturing and retail sector have created a thriving market for commercial rentals in Chennai. This firming up of the commercial rental market has also provided the infrastructure for software companies setting up their offices in the city while many foreign banks are also see to be setting up office in Chennai as investment trends propel business opportunities.

Office space rentals in Chennai

However, demand seems to have outstripped supply in the commercial segment too. As Chennai's commercial prospects swear by the countless IT firms, about90 % of the commercial space has been taken up by IT and related services companies, in the last few years. As companies are on the prowl for good office space, the demand and supply ratio still remains to be fulfilled.

With office space in the heart of the city being occupied, the IT companies are now looking at sick industrial unit areas such as Guindy, Taramani, Ambattur and Padi, which are being converted into Software Technology Parks (STPs). Though a steady requirement for smaller office space is also expected in the CBD and non-CBD areas; due to limited supply, there is always a possibility for the escalation of rental values   

According to market sources, current office space rentals per sq ft of quality space per month in Chennai's CBD are in the range of Rs 55 to Rs 65. While in OMR (IT corridor) it is between Rs 35 and Rs 40, in Guindy in the range of Rs 35 and Rs 45 and at Ambattur - an emerging IT destination, Rs 25 and Rs 30.

The slowdown in Bangalore has been to some extent responsible for the companies moving into Chennai; raising rental rates to have shot up between 30% and 40% over the year in Chennai's CBD.

Retail rentals in Chennai

Chennai, along with other parts of India has been in the forefront in retail business. With the FDI relaxation in retail, it has become a lucrative business opportunity which in turn has proved to be a boon for the commercial real estate of Chennai. This buzz in retail activity has created a niche market for commercial/ mall space rentals..

The demand for mall or retail space in Chennai has however remained with various brands entering the market and looking for quality space within premium streets such as Khader Nawaz Khan Road. High-street locations will continue to be viewed favorably by retailers despite the rapid growth in mall development.

The stiff competition and demand for retail space has called on for high rental rates in Chennai in the last few years. Rents in Adyar and Anna Nagar, have grown by 15 per cent and 14 per cent at Rs 75 per sq. ft per month and Rs 80 per sq. ft per month, respectively.

High rental rates are also applicable for thriving markets like Usman road at T. Nagar for traditional retailing as the demand continues. Majority of retail activity in Chennai is primarily concentrated in and around Nungambakkam, Cathedral Road and T Nagar.

Other prominent retail areas are Anna Nagar, Adyar, Besant Nagar, Purasawakkam and Mylapore. A recent study has shown that the rental rates in Pondy Bazaar ranges between Rs 50 and Rs 70 per sq.ft, North Usman Road, Rs 30 - 60 per sq.ft and G.N. Chetty Road, Rs 30-45 sq.ft.

In the retail market segment there are at least 10 major investments in shopping malls coming up Chennai, in areas like N.M. Road, Vadapalani,P.H.Road,Anna Salai, C-IN-C Road, OMR, Velacheri and N.H.Road and will be operational shortly bringing an outpour in Chennai's commercial rental market.