India’s Mindspace REIT Paying $270M for Shell-Anchored Campus in Second Chennai Buy

India’s Mindspace Business Parks REIT has agreed to pay INR 25.4 billion ($270 million) to acquire its second property in Chennai as it expands beyond its core Mumbai and Hyderabad markets.

In an announcement on 31 March, Mindspace REIT said it will acquire full ownership of Commerzone Pallikaranai, a 2.6 million square foot (241,500 square metre) office campus on the southern tech hub’s Pallavaram-Thoraipakkam Road (PTR) from its sponsor, K Raheja Corp, under a right of first offer agreement.

The 12.4-acre (5 hectare) campus includes about 1.4 million square feet of completed space with 55 percent of that area already leased to oil major Shell, according to a JLL report commissioned by Mindspace. The remaining 1.2 million square feet of the project is scheduled for delivery in March 2027.

“Chennai is one of India’s most resilient office markets, and with PTR established as a major corridor where demand continues to outpace supply, this acquisition positions us strongly to capture rental upside,” Mindspace REIT managing director and chief executive Ramesh Nair said in a statement. 

Rising Rents

With the newest building in the campus having been completed in November, committed occupancy in the completed portion of Commerzone Pallikaranai is currently at 73 percent, according to Mindspace with the lease to Shell ranking as the largest single transaction in the Pallavaram-Thoraipakkam Road corridor in the past five years, according to the JLL report.

In-place rents in the campus average INR 63 per square foot per month with Mindspace indicating that a recent lease was signed at rate of INR 85 per square foot. 

“This campus offers a strong multinational tenant base, long lease tenures and embedded NOI growth potential from its under-construction area,” said Nair.

Having achieved platinum certification under both the IGBC regime for sustainable buildings and the Well rankings for healthy workplaces, the campus carries a weighted average lease expiry term of about 11 years.

Growth Corridor

Also known as 200 Feet Radial Road, Pallavaram–Thoraipakkam Road connects Chennai’s established IT corridor on Old Mahabalipuram Road with the Grand Southern Trunk Road which leads to the city’s airport, with Singapore’s CapitaLand Investment having opened the first phase of its International Tech Park Chennai on the strip in 2023. 

Bloomberg reported in March that CapitaLand was in talks to sell International Tech Park Chennai to Mindspace for an undisclosed sum. 

Chennai recorded net absorption of 5.7 million square feet in 2025, up 15 percent year-on-year, while maintaining the lowest Grade A vacancy among India’s major office markets at approximately 7.1 percent, according to the JLL report. 

Global Capability Centres — dedicated offshore operations established by multinationals to handle technology, finance and other business functions — accounted for about 20 percent of leasing activity in the city, the second-highest share among major Indian markets, JLL said.

Leasing momentum has increasingly shifted toward the Pallavaram-Thoraipakkam Road corridor as the Old Mahabalipuram Road market approaches capacity, with limited new supply expected until 2028.

The Pallavaram-Thoraipakkam Road area recorded gross absorption of around 2 million square feet in 2025, according to JLL, with rents ranging between INR 80 and INR 90 per square foot per month, compared with INR 120 to INR 130 on OMR.

Rents in the commercial hub grew at a compound annual rate of 8.6 percent from 2021 to 2025, with the corridor expected to contribute 43 percent of Chennai’s total new office supply over the next two years.

Growing Portfolio

The acquisition will increase Mindspace REIT’s total leasable portfolio to 41.6 million square feet from approximately 39 million square feet, while gross asset value will rise to INR 467.6 billion from INR 441.3 billion, according to the announcement.

Chennai’s share of the portfolio will increase to approximately nine percent from three percent by leasable area, with Mumbai and Hyderabad together accounting for 81 percent of the REIT’s space as of 31 December.

The REIT’s loan-to-value ratio is expected to rise to 28 percent from 25.6 percent following the transaction.

Mindspace REIT is funding the equity component through a preferential issuance of up to INR 6.7 billion in new units at INR 485 per unit, subject to unitholder approval through a postal ballot on 24 April, according to the investor presentation. The purchase price represents a 3.4 percent discount to the average of two independent valuations.