Published On:
November 28, 2025
Updated On:
November 28, 2025
Rating agency ICRA forecasts India's commercial office net absorption in the top six cities will hit a record 69–70 million square feet (msf) in FY2026, pushing vacancy levels down to a historic low of 12–12.5% by March 2027. The demand surge is primarily fueled by GCCs (Global Capability Centres - 40% share) and the BFSI sector, capitalizing on India's cost advantage and making Chennai and Bengaluru the tightest markets.
India’s commercial real estate office segment is entering a robust high-growth phase, with momentum expected to remain strong through FY2027, according to the rating agency ICRA (Investment Information and Credit Rating Agency). The outlook signals a tightening market across the top six cities: Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai Metropolitan Region (MMR), and Pune.
Record Absorption and Shrinking Vacancy
ICRA forecasts net absorption (total space leased minus vacated space) in these six markets to hit a record 69–70 million square feet (msf) in FY2026. Demand is expected to remain high, exceeding 65 msf in FY2027, marking three consecutive years where demand outpaces new supply. Consequently, vacancy levels (unoccupied units) are projected to shrink from 13% (September 2025) to a historic low of 12–12.5% by March 2027.
Key Demand Drivers and GCC Reliance
The surge is attributed to three main drivers: Global Capability Centres (GCCs), Flex-space operators, and the Banking, Financial Services and Insurance (BFSI) sector. GCCs are projected to lease 50–55 msf of space between April 2025 and March 2027, accounting for about 40% of total incremental demand. India’s fundamental advantages, including its cost competitiveness, vast skilled talent pool, and scalable technology infrastructure, are driving this global reliance despite external economic challenges.
City-wise Market Tightening
Market conditions are becoming acutely tight in certain cities. Chennai is forecast to reach the tightest vacancy level at 5.5–6% by March 2027, followed closely by Bengaluru at 7.5–8%. While Delhi-NCR currently holds the highest vacancy at 21%, it is expected to improve slightly to 19.5–20%.
Output 2: Conversational version
INDIA’S OFFICE MARKET BOOM: ICRA Predicts 3 Years of Record Demand
India’s office market is on fire! Rating agency ICRA (Investment Information and Credit Rating Agency) confirms the sector is entering a massive high-growth phase, with demand set to outpace new supply for three straight years through FY2027.
Net absorption—the true measure of demand—is forecasted to hit a record 69–70 million square feet (msf) in FY2026, primarily across the top six cities (Bengaluru, Chennai, Delhi-NCR, Hyderabad, MMR, & Pune). This surge is projected to drive overall vacancy levels down to a historic low of 12–12.5% by March 2027.
What’s driving this? Three sectors: Global Capability Centres (GCCs), Flex-space operators (co-working), & Banking, Financial Services and Insurance (BFSI). GCCs alone will drive 40% of new demand, leveraging India's cost advantage & massive skilled talent pool.
The market tightening is dramatic in some cities: Chennai is forecasted to be the tightest market globally with vacancy dropping to 5.5–6% by March 2027, while Bengaluru hits 7.5–8%. Even Delhi-NCR, despite its high current vacancy (21%), is expected to see improvement.
