In a significant shift for its commercial landscape, Chennai has witnessed a new champion emerge in its office real estate market. Global Capability Centres (GCCs) have overtaken the once-dominant IT sector to become the primary engine for office space leasing in the city during 2025.
The Numbers Behind the Takeover
Data from the Anarock Group reveals the scale of this change. Out of a total gross office leasing of 8.4 million square feet in Chennai last year, GCCs accounted for a commanding 51% share, leasing 4.3 million sqft. This performance not only placed them ahead of all other industries but also helped counterbalance a noticeable slowdown in demand from the IT and IT-enabled services (ITeS) sectors.
Chennai's trend outpaced the national average, where GCCs contributed 41% of gross office absorption across India, an increase from 36% in 2024. The city's office market absorption, a key indicator of sectoral expansion, has shown consistent growth. GCC leasing in Chennai has climbed steadily from 2 million sqft (27% of the total) in 2023 to 3.29 million sqft (41%) in 2024, before reaching its current peak.
Market Dynamics and Expert Insight
Peush Jain, Managing Director of Commercial Leasing and Advisory at Anarock, highlighted this sectoral realignment. "The IT and ITeS sector, traditionally the dominant force in office space leasing here, has experienced a continued moderation, while demand from GCCs has been on the rise," Jain stated. This shift reflects broader economic and industry dynamics playing out in the region.
The soaring demand from GCCs has directly impacted market fundamentals. New office supply in 2025 was 3.90 million sqft, marking a 72% growth. However, net office absorption was substantially higher at 5.6 million sqft, representing a 12% year-on-year growth. This demand-supply gap has tightened the market considerably.
Rising Rents and a Positive Outlook
The direct consequences of this tightening are clear. Chennai remains the only major Indian city with a single-digit vacancy rate, which declined further from 9.2% to 8.8% in 2025. Consequently, average monthly rentals saw a 5% annual increase, reaching nearly Rs 79 per square foot.
The outlook for 2026 remains optimistic, fueled by continued GCC activity. "Current trends indicate that the Chennai office market will continue to show positive momentum in 2026, with GCC demand remaining strong," added Jain. Data suggests both new supply and absorption could grow by 10%-15% in 2026 compared to the previous year.
Beyond Chennai, the GCC expansion wave is influencing other parts of Tamil Nadu. While Chennai and Mumbai remain key data centre hubs, cities like Coimbatore and Madurai are newly emerging as data centre hubs. Furthermore, Coimbatore ranks among the top tier-2 cities in India for GCC expansion, indicating the trend's widening geographic footprint.
