India’s Net Annual Office Leasing to Hit Record 50 MSF by FY27: Crisil Report

Mumbai – India’s net leasing of Grade A commercial office space is projected to surpass 50 million square feet (MSF) in the financial year 2026-27, marking an all-time high, according to a report released by Crisil Ratings on Thursday.

Driven by a healthy Compound Annual Growth Rate (CAGR) of 7–9% over the next two fiscal years, net office leasing is expected to maintain strong momentum. During the same period, the supply of new office spaces is estimated at 53–57 MSF annually, translating into a 6.5–7?GR increase in India’s total commercial office stock.

This expansion in demand and supply is expected to improve occupancy levels, thereby boosting cash flows for office space developers. Combined with prudent financial management and low leverage, this will help maintain stable credit profiles, the report added.

The analysis is based on a study of 78 commercial office space players, which together account for roughly 25% of India’s Grade A office inventory.

Key Growth Drivers

The report highlights that after a strong post-pandemic recovery over the past two years, India's office leasing market is poised for steady growth. Key factors include:

• Decline in work-from-home practices

• Robust demand from Global Capability Centres (GCCs)
  GCCs alone now contribute 30–40% of annual net leasing across sectors, benefiting from India’s vast skilled workforce and competitive costs.

From a sectoral standpoint, double-digit leasing growth is expected from:

• BFSI (Banking, Financial Services, and Insurance)
  Driven by steady credit expansion, increasing assets under management, and workforce growth.

• Flexible workspace providers
  Expanding rapidly with hybrid-friendly, agile, and cost-effective office solutions.

However, net leasing growth in the IT/ITeS sector is expected to remain moderate at around 5–6%, with most demand coming from GCCs, while leasing by domestic firms in the segment remains subdued.

Supply Trends and Market Outlook

India added around 47 MSF of office space in FY24. This figure is projected to rise to 53–55 MSF in FY25 as several ongoing projects reach completion. Developers are expected to maintain this pace in FY26 and FY27, carefully calibrating supply in response to vacancy levels in specific micro-markets.

As a result, total Grade A office stock is expected to grow from approximately 810 MSF in March 2025 to 920–925 MSF by March 2027.

Vacancy Trends

According to Gautam Shahi, Director at Crisil Ratings, overall vacancy levels in India’s Grade A office segment are projected to decline to 15.5–16% by FY27, improving by 100 basis points (bps) over FY25. However, he noted that the trend will differ across micro-markets.

Notably, the National Capital Region (NCR) and the Mumbai Metropolitan Region (MMR) — together accounting for one-third of India’s commercial office space — could see vacancy rates decline by 200–250 bps, driven by high demand from BFSI, flex space operators, and IT/ITeS sectors.

With inputs from IANS