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BENGALURU/CHENNAI: Demand for temporary office facilities has shot up in Chennai, as companies hit by the devastating floods look for office space to accommodate staff to keep their businesses running. Rent for a few such places available in the city has jumped 25-30% in a week. In the past week, companies such as NTT Data, Sutherland, Bank of New York Mellon, L&T IES, L&T Infotech, Barclays, Petrofac and Telstra Global with significant presence in Chennai have either taken up interim space or are looking for it. Most of these companies have one office in Chennai which they were forced to vacate due to flooding.
“The city has very few incubation spaces and (they) are running out fast as there has been an upsurge in demand. Companies that operate out of Guindy and Manapakkam are looking at alternative options as that area was worst affected due to the floods,” said Sarita Hunt, managing director for Chennai and Coimbatore at real estate consultancy JLL India. “These firms are looking for incubation space for three-four weeks.” Incubation centres typically provide low-cost working space with infrastructure to startups. In the aftermath of the floods, these facilities offer a quick alternative for companies to put their business-continuity plans into working.
The rains that pounded Chennai have severely damaged its infrastructure, including roads and electricity lines. The Tamil Nadu government has estimated losses at about Rs 8,480 crore.Several have died. As the floods inundated many offices, companies were forced to invoke business continuity plans, including shifting employees to other cities and taking up office space in places within the city which were unaffected.
“BNY Mellon has implemented contingency arrangements for our employees in affected areas, invoking the cross-regional and onshore recovery arrangements for our Chennai-based operations,” said a BNY Mellon spokeswoman.”These arrangements will remain in place as long as necessary for a full and complete return to business as usual status.”
Areas to the south and southwest of Chennai, where the IT and financial services hubs lie, were badly affected compared with working spaces in the North. Many service delivery firms housed at the DLF IT Park in South Western Chennai -which has 44 companies in IT, tech development, and financial technology servicing largely western clients -have begun looking for alternative work spaces to ensure business continuity for their clients. Another tech park that is badly affected is Olympia in Guindy, which has 10-15 marquee clients.
Software company Photon has taken up 18,000 sq ft at Ispahani Centre, Nungambakkam, where the deluge was comparatively less. It has also occupied 13,000 sq ft in IIFL’s SEZ in Perungudi, which lies on the Old Mahabalipuram, the IT corridor. Photon, which is looking for temporary space in Bengaluru too, has moved employees in hundreds to the Karnataka capital.
Telstra Global has taken up 35 seats at the Apeejay Business Centre in Chennai, while NTT Data is scouting for office space. “The company is looking to house about 100-150 employees in a temporary location as its offices in the DLF IT Park are completely flooded,” said a top NTT Data executive.
The sudden upsurge in demand for short-term office space has pushed up rental in some parts of Chennai for commercial properties. According to JLL India, in central business district of Chennai, it has gone up to Rs 100 per sq ft a month from Rs 75-80 before the floods.