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BofA: BofA Leases 1.1 m sq ft Office Space in Chennai

In the largest office space transaction in 2023, Bank of America (BofA) has leased 1.1 mn sq ft office space in Chennai, one of its largest captive centers outside of the United States.

The newly leased property at DLF downtown, Taramani is being leased for its back office operation in India. “The property is in the fitouts phase now and the company is expected to start operation from Q2 2024 for the first phase,” said two people aware of the development.

In the first phase the company will occupy around 7.1 lakh sq ft, while the remaining 3.9 lakh in part of the second phase expansion option by the multinational bank, as per the registered document. As per the industry estimates, the property can seat around 7000-8000 employees.

“DLF Downtown phase one is fully committed and is under fitouts for many clients. The project is commanding a rent of over Rs 100 per sqft,” said one of the persons quoted above.

DLF Downtown Taramani, spread over 27 acres, is a joint venture between the developer’s rental business arm DCCDL and the Tamil Nadu Industrial Development Corporation (TIDCO).

A detailed email sent to BofA did not elicit any response till the press time.Of the total nearly 7 million sq ft project, DLF has already started construction of 3.3 million sq ft of built up area in the first phase. Two of the large corporations occupying space in the project include Standard Chartered Bank’s wholly-owned subsidiary Standard Chartered Global Business Services (GBS) and Bank of America. Other large tenants including KLA-Tencor, Fidelity, JRay, Synechron and Simpliwork have committed office space in the LEED platinum certified building. “Overall leasing reflects a strong market sentiment for Grade A assets and a stronger Chennai office market. The 3.3 mn sq ft of the first phase of the project has been pre committed for initial take up and phased expansion,” said the earlier person.

Global inhouse centers, or GICs, of top multinational companies and banks that rely on local engineering and technology talent for their worldwide operations also witnessed a rebound in large deals. Global centers, particularly in the technology and BFSI sectors, have cornered almost 40% of the significant deals in the top six cities, with 30 million square feet of office leasing transactions in top six cities.

Captive centers are generally client-owned and operated service delivery centers, typically in at an offshore location, which is also low-cost locations, where the service resources are comparatively of low cost and are provided directly to the client.

The last quarter of the year witnessed the highest-ever demand for office spaces in India, with all the three southern cities of Bengaluru, Chennai and Hyderabad registering best performance since the Covid-19 pandemic. While Bengaluru and Delhi NCR drove leasing activity during 2023, accounting for about half of the total demand of office space in India, Chennai made it to the top three list for the first time. Furthermore, with more than 2x leasing activity in 2023 as compared to 2022, Chennai breached all earlier highs and recorded 10.5 mn sq ft of gross absorption, mentioned Colliers.

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