“50% of Chennai’s office real estate market inventory has upgrade potential”

THE HINDU BUREAU
Chennai’s office real estate market presents a significant opportunity for value enhancement through strategic upgrades with 52-57 million sq ft of the total 89 million sq ft office stock in the city holding upgradation potential, representing a substantial portion of the market, says a report published by real estate consulting firm CBRE South Asia Pvt. Ltd.”

“According to the report titled ‘From Existing to Exceptional: A Strategic Approach to Retrofitting Indian Office Spaces’, the opportunity is largely concentrated in OMR Zone 1, OMR Zone 2, Mount Poonamallee High Road, and sub-markets indicating specific areas where modernisation efforts can yield the most impact.

The estimated assets present an opportunity to yield rental premiums up to 20%. The achievable rental premiums post-upgrade may vary across these micro-markets, it said.

The potential investment opportunity in the city is estimated to be ₹39-66 billion. By focusing on upgrading these assets, developers and investors can tap into the demand for modern spaces and potentially achieve attractive rental increases, particularly in the more promising micro-markets. This strategic approach to retrofitting can enhance the overall competitiveness and attractiveness of Chennai’s office market, as per the report.

“India’s office real estate sector is undergoing a significant transformation, with Chennai is emerging as a crucial driver of this evolution. A substantial portion of the city’s existing office inventory is currently exceeding 50% of its 89 million square feet, has been identified for necessary upgrades,” says Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE said.

This initiative extends beyond mere value enhancement, serving as a critical step towards aligning office spaces with global benchmarks in sustainability, wellness, and technological integration, he added”