New Delhi [India], November 26 : Rating agency ICRA revealed that the net absorption in the top six office markets, Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai Metropolitan Region (MMR) and Pune, would reach a record 69-70 million square feet (msf) in FY2026. The momentum is expected to remain strong in FY2027, with absorption likely to cross 65 msf.
The agency said that net absorption (the total space leased minus space vacated) will continue to exceed new supply for the third straight year, taking vacancy rates down to 12-12.5 per cent by March 2027, the lowest in recent history.
This surge follows a robust performance in FY2025, when net absorption hit 66 msf, up 15 per cent year-on-year, surpassing new supply of 58 msf. The first half of FY2026 has continued this pace, with 36 msf absorbed compared to 30.6 msf of new supply. Vacancy levels fell from 15.6 per cent in March 2024 to 13 per cent by September 2025, signalling steady demand.
Anupama Reddy, Vice President and Co-Group Head, Corporate Ratings, ICRA, said, "The surge in demand for office space is being driven by expanding global capability centres (GCCs), flex-space operators, and the Banking, Financial Services, and Insurance (BFSI) sector. Despite global headwinds, including policy tightening and trade restrictions in the US, office leasing activities by the GCCs in India have remained buoyant."
Reddy added that GCCs are expected to lease 50-55 msf of office space between April 2025 and March 2027, forming about 40 per cent of total incremental demand. "The sustained demand from the GCCs and BFSI, coupled with India's cost and talent advantages, is setting the stage for a new era of growth and stability in the sector," she said.
The growing presence of GCCs has become one of the strongest pillars of India's office real estate, contributing 35-37 per cent of total net absorption during FY2024-FY2025. State-level incentives such as subsidies and infrastructure support are also helping accelerate this trend.
Among cities, Bengaluru continues to lead, with vacancy expected to fall from 9.2 per cent in September 2025 to 7.5-8 per cent by March 2027. Chennai's vacancy rate is likely to dip to 5.5-6 per cent, while Delhi-NCR, despite having the highest vacancy, may improve from 21 per cent to about 19.5-20 per cent. Hyderabad and Pune are set to stay stable, while the MMR region will see further declines, reflecting sustained demand.
"With vacancy rates projected to reach historic lows and debt protection metrics improving across the board, ICRA expects the sector to remain an attractive destination for both domestic and international investors," Reddy said. She added that India's scalable technology infrastructure and ongoing policy support are reinforcing its position as a global office hub.
ICRA said that it will "continue to monitor macroeconomic and geopolitical developments, but net absorption is expected to remain strong for commercial office leasing in FY2026 and FY2027."
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