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India’s office space market is expected to witness steady growth in net leasing activity across the top seven cities this fiscal year, with demand projected to rise 6–7 per cent, according to Crisil Ratings. The outlook, however, remains sensitive to global headwinds such as geopolitical tensions, tariff-related challenges and potential disruptions linked to artificial intelligence adoption. The IT and ITeS sector continues to be the primary demand driver, though cautious expansion plans are influencing investments. Vacancy levels in Grade A commercial spaces are expected to ease marginally as absorption trends remain stable.
Net leasing of office space across India’s top seven cities is projected to increase by 6–7 per cent in the current fiscal year, as per Crisil Ratings, although overall demand may face pressure from global uncertainties, including geopolitical tensions, tariff-related concerns and emerging risks linked to artificial intelligence-led changes in the workforce landscape. Advertisement
The IT and ITeS sector continues to remain the key contributor to office space absorption in the country. However, companies are adopting a cautious approach toward expansion amid ongoing global economic uncertainty, which is influencing investment decisions and slowing aggressive capacity addition.
In its statement released earlier this week, Crisil Ratings indicated that vacancy levels in India’s Grade A commercial office space are expected to gradually improve, declining by around 50 basis points to approximately 15.5–16.0 per cent by the end of the fiscal year.
Net leasing, measured in million square feet, represents the net change in occupied office space after accounting for both new leasing activity and space vacated during the same period. For the current fiscal year, net leasing is estimated to remain in the range of 48–49 million square feet across major urban markets, including the Mumbai Metropolitan Region, Delhi-NCR, Bengaluru, Pune, Hyderabad, Chennai and Kolkata.
Gautam Shahi, Senior Director at Crisil Ratings, noted that overall net leasing is expected to grow within the 6–7 per cent range this fiscal. He further stated that the outlook remains exposed to risks arising from AI-driven disruptions in the IT and ITeS sector, which could influence hiring patterns and expansion strategies.
He also highlighted that rising geopolitical uncertainties and tariff-related issues may affect leasing decisions, particularly among Global Capability Centres, which play a growing role in office space demand.
While acknowledging these near-term challenges, Crisil Ratings added that India’s structural strengths, including its large skilled workforce, competitive cost environment, supportive policy framework and macroeconomic stability, are expected to help the sector manage external pressures over time.
Source PTI
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