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KLA Tencor, a provider of cutting-edge process control systems based in California, has secured a lease for an impressive 320,000 square feet of office space in the highly anticipated DLF Downtown Taramani in Chennai. This substantial deal, one of the largest in the city's commercial leasing segment, signifies the company's commitment to expanding its presence in the region. The financial details of the transaction have not been disclosed, but industry insiders reveal that the relocation to the new office is expected to take place within the next three months.
CBRE, a renowned global property consultant, played a crucial role as the transaction advisor for this significant agreement. Sriram Khattar, the managing director of DLF's rental business, refrained from commenting on the specifics of the deal but expressed confidence in the progress of the DLF Downtown project. The initial phase, located in Taramani, Chennai, is nearing completion, with over 80 percent of the space already leased. DLF aims to fully lease the remaining space before the project's completion.
DLF's ambitious plans extend beyond the current development phase, as they are concurrently working on the construction of the second phase, which spans an impressive 1.1 million square feet. Encouragingly, this phase has already been leased, showcasing the strong demand for quality office spaces. Furthermore, DLF envisions the potential to develop an additional 3.5 million square feet at the same site, emphasizing its commitment to meeting the evolving needs of the market.
The success of DLF's endeavours is evident in the financial performance of its rental arm, DLF Cyber City Developers Ltd. (DCCDL), which reported a remarkable 19 percent year-on-year increase, generating revenue of Rs 5,419 crore in FY 23. This growth reflects the strong demand for office spaces in Chennai, as evident from the absorption of approximately 6.1 million square feet in 2022, representing a significant year-on-year surge of 63 percent. Chennai's leasing activity continued to soar in Q1 of 2023, experiencing a 19 percent increase from the previous quarter, with around 2.0 million square feet of space being occupied. The city now accounts for 10 percent of India's overall office stock.
In terms of supply, Chennai witnessed a substantial addition of approximately 4.1 million square feet in 2022, demonstrating a notable year-on-year increase. This rise in supply, coupled with the robust demand for newer developments, highlights a distinct preference among major occupiers for high-quality work environments. While there has been a slight slowdown in large leasing decisions due to global macro headwinds such as rising interest rates and a tech multinational hiring slowdown, the demand for prime office spaces remains strong. This indicates the resilience and adaptability of the real estate market in navigating challenges and seizing opportunities for growth.
DLF Downtown, the new epicentre of Chennai's IT corridor, offers 6.8 million square feet of workspaces and a harmonious work-life balance. Designed by renowned architect Gensler and constructed by Eversendai, this project embodies sustainability and safety. With world-class amenities, it provides an ideal environment for productivity and collaboration, allowing you and your team to achieve ambitious business goals.
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