CHENNAI OFFICE MARCH 2019 MARKETBEATS 10% 0.5msf 1.0msf GRADE A VACANCY GRADE A NEW SUPPLY GROSS LEASING (Q1 2019) (Q1 2019) (Q1 2019) MARKET INDICATORS OVERALL HIGHLIGHTS 12 Month Q1 2018 Q1 2019 Forecast Upswing in leasing momentum Overall Vacancy 8.4% 10.09% The Grade A office leasing activity in Q1 2019 was over 1 million sf, clocking a 20% Weighted Average Net Asking Rental (INR/sf/month) 53.59 55.76 q-o-q growth. However, on account of the overall net absorption being lower than the new space additions, vacancy rose marginally to 10.1% in Q1 2019. However, YTD Net Absorption (sf) -205,633 252,916 vacancy levels continue to remain in single digits across the core office markets. GRADE A OVERALL RENT Pre-leasing activity was up 15% y-o-y with the momentum driven by upcoming SEZ & VACANCY RATE developments in the suburban south and peripheral south-west markets. 60 40% Flex operators pick up steam 50 30% 40 Flex space operators took up maximum space in Q1 2019, clocking a 40% q-o-q 20% increase. Key transactions included Cowrks, Smartworks and Workafella. Driven by 30 20 10% limited vacancy in the core markets, flex space operators are looking to fill the gap 10 0% for enterprise demand for ready spaces by picking up and refurbishing slightly 2012 2013 2014 2015 2016 2017 2018 Q1 2019 average, older buildings present across the central, off central and suburban areas Net Asking Rental (INR/sf/month) Vacancy Rate (%) of Chennai. GRADE A PRE COMMITMENT AND NET Rents strengthening in core markets ABSORPTION Given the single digit vacancy levels in the suburban south and south west markets, 6,000 A Cushman & Wakefield 5,000 Research Publication transacted rentals for Grade A properties recorded a appreciation of 3% q-o-q as 4,000 occupier enquiries have increased amid an ongoing supply crunch which is 3,000 2,000 DATA expected to last till H2 2019 in the core markets. We foresee an increase of another 1,000 INTO 3-5% in rents on available spaces for the remaining 2019 with prominent office ACTION 0 corridors turning developer oriented with upcoming supply achieving appreciable 2012 2013 2014 2015 2016 2017 2018 Q1 2019 Pre-commitment (000' sf) Net Absorption (000' sf) levels of pre-commitments. www.cushmanwakefield.com Source: Cushman & Wakefield Research CHENNAI OFFICE MARKETBEAT MARCH 2019 PLANNED & GRADE A WTD. AVG. RENT* YTD INVENTORY VACANCY YTD LEASING UNDER YTD NET Rohan Sharma CONSTRUCTION SUBMARKET (SF) RATE ACTIVITY CONSTRUCTION ABSORPTION Director, Research COMPLETIONS INR/SF/MO US$/SF/YR EUR/SF/YR (SF) Tel: +91 124 4695555 [email protected] CBD 2,363,551 12.15% 164,000 699,673 86,783 154,500 78.47 13.61 12.10 Off-CBD 482,636 20.57% 0 61,474 0 0 73.09 12.68 11.27 South-west 10,979,740 3.34% 259,407 3,551,294 90,000 212,679 70.95 12.31 10.94 North-west 3,232,000 25.81%** 114,987 0 360,000 -312,309 45.00 7.81 6.94 Suburban South 16,269,012 2.08% 184,768 2,850,000 0 8,546 72.70 12.61 11.21 Peripheral South 10,794,655 16.59% 189,500 2,487,450 0 189,500 48.95 8.49 7.55 Peripheral South-west 4,222,000 28.94% 100,000 5,785,096 0 0 56.70 9.84 8.74 TOTALS 48,343,594 10.09% 1,012,662 15,434,987 536,783 252,916 55.76 $9.67 €8.60 The report highlights Grade A details only Certain indicators are historically corrected by addition / deletion of older / refurbished projects as per grade A classification and accounting for changes in built-up / leasable area besides adjusting tenant leases to reflect accurate market conditions. Net absorption refers to the incremental new space take-up; renewals not included in leasing activity statistics *Weighted average asking rental rates for vacant spaces that provide core facility, high-side air conditioning and 100% power back up **Increase in vacancy is due to surrendering of office space of about 400,000 sf near Ambattur. IT-BPM – Information Technology – Business Process Management Key to submarkets: CBD – Anna Salai, Nungambakkam, RK Salai; Off-CBD – T.Nagar, Alwarpet, Kilpauk, Egmore, Chetpet, Royapettah, Kotturpuram; Peripheral South- Sholinganallur, Thoraipakkam, Navalur, Siruseri, Padur; Suburban South – Perungudi, Taramani, Thiruvanmiyur, Velachery; South West – Guindy, Ashok Nagar, Vadapalani, Manapakkam, Ekkaduthangal; North West – Ambattur, Padi, Annanagar, Koyambedu, Arumbakkam; Peripheral South-west – Singaperumalkoil, Tambaram, Guduvanchery, Perungalathur, Pallavaram. US$ 1 = INR 69.17; € 1 = INR 77.84 Numbers for the First quarter are based on market information collected until 10th March 2019 KEY LEASING TRANSACTIONS – Q 1 2 0 1 9 DATA PROPERTY SUBMARKET TENANT SF LEASE TYPE INTO ACTION Highstreet IT Park CBD Workafella 142,000 Fresh Lease Arihant Technopolis Suburban south CoWorks 120,000 Fresh Lease DLF South west IDP 41,072 Fresh Lease A Cushman & Wakefield Research Publication SIGNIFICANT PROJECTS PLANNED & UNDER CONSTRUCTION Cushman & Wakefield (NYSE: CWK) is a leading global real estate PROPERTY SUBMARKET MAJOR TENANT SF COMPLETION DATE services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate Brigade WTC Tower 1 & 2 Suburban South NA 1,800,000 Q1 2020 services firms with 48,000 employees in approximately 400 offices and 70 countries. In 2017, the firm had revenue of $6.9 billion across DLF Taramani Suburban south NA 1,000,000 Q1 2021 core services of property, facilities and project management, leasing, capital markets, valuation and other services. To learn more, DLF MRC Guindy South west NA 800000 Q1 2022 visit www.cushmanwakefield.com or follow @CushWake on Twitter. www.cushmanwakefield.com Copyright © 2019 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy..