India’s office leasing sector is poised for significant growth in the coming fiscal year, with net absorption of office spaces across six major cities expected to rise by 10-11% to 59-60 million square feet, according to a recent credit rating agency ICRA report. The positive trend is anticipated to continue, with a projected 3-4% increase in 2025-26 despite a massive influx of new supply.

ICRA’s analysis highlights that major office markets—Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai Metropolitan Region (MMR), and Pune—are witnessing robust leasing activity, driven by strong demand from Global Capability Centres (GCCs) and domestic corporations. “The leasing activity remained firm with net absorption of around 54 million square feet in 2023-24 and 44 million square feet in the first nine months of this fiscal,” said Anupama Reddy, Vice President and Co-Group Head of corporate Ratings at ICRA.

While an estimated 125-130 million square feet of new office space is set to hit the market over the next two years, vacancy rates are expected to stay relatively stable. By March 2025, vacancy levels are projected to range between 14.5-14.7%, improving slightly to 14-14.5% by March 2026 as absorption remains strong. This resilience in demand, supported by increased physical occupancy in offices and regulatory changes allowing floor-wise de-notification of IT-SEZs, has further strengthened market confidence.

Industry experts see the growing influence of GCCs and flex space operators as key drivers of this expansion. Peush Jain, Managing Director of Commercial Leasing and Advisory at Anarock Group, noted, “The office sector growth is expected to stay buoyant with supply to touch a billion square feet by the end of 2025, with record leasing activity led by GCCs and flex space operators.”

With sustained momentum in office space absorption and evolving workspace preferences, India’s commercial real estate sector appears well-positioned for continued expansion, reinforcing its status as a global hub for corporate occupiers.