CHENNAI: The city’s four lakh employees strong IT and ITES ecosystem, is losing the race -albeit momentarily – to manufacturing and consulting firms that are briskly occupying office spaces during the first half of the current calendar year.
Companies such as Renault Nissan, Ford, and other auto component and ancillary firms and consulting firms like Ernst and Young took lakhs of sq. ft at a time office space absorption proved slower than usual at 1.8 million sq. ft with a 9% drop.
During the same period, IT firms struggled to grab office space as an increasingly fragmented availability across the city proved ineffectual to meet large scale need from IT firms.
According to a report by real estate consultant Knight Frank, IT and IT-enabled sectors still held the largest consumer tag in Chennai but they lost some market share with only 0.7 million sq. ft of total transacted volumes falling into their basket.
“The dearth of large format office spaces caused IT/ITeS to postpone their leasing decisions,” a consultant wrote in the Knight Frank report. The report said IT and associated sectors contributed to 40% to office space occupation in first half of 2016, a drop from 46% of 2 million sq. ft transacted in first half of 2015.
Compared to this, manufacturing sector offtake of office space improved continuously from 15% in H12015 to 24% now.
Kanchana Krishnan, who heads Chennai for Knight Frank, noted that close to 76% of commercial office space deals fell under the size of 50,000 sq. ft; the average deal size was about half of that some quarters ago. It means the deal sizes are growing year after year but supply of sizeable office spaces are not keeping pace.
Experts said IT firms want to bring its workforce from across different locations to one large office, a task automaker Ford has completed after many months of scouting for space.
“The IT/ ITES occupier vacates multiple facilities to occupy single office space for better operational efficiency, transportation convenience and other strategic reasons,” said Krishnan.
According to sources, large firms are looking to consolidate workspaces across the city.
Credits ET Realty