India’s Grade A commercial office space is expected to grow at a healthy compound annual growth rate (CAGR) of 7–9% over the next two fiscal years, reaching the 50 million square feet mark by FY27. Annual supply is expected to remain strong at 53–57 msf, driving a 6.5–7% CAGR growth in overall office stock. This increase in supply and leasing activity is likely to boost occupancy levels and enhance cash flows for commercial office players. Credit profiles are expected to remain stable, supported by improved cash flows and prudent leverage.
The commercial office market is set for steady net leasing growth over the medium term, driven by reduced work-from-home arrangements and strong demand from global capability centres (GCCs). The BFSI3 sector and companies offering flexible workspaces are expected to drive growth, while the IT/ITeS4 sector is expected to remain moderate. The overall vacancy level for India’s Grade A office market is expected to decline to 15.5-16.0% by the end of fiscal 2027.
CRISIL Official Report
Anchor text: CRISIL’s latest commercial real estate outlook
URL: https://www.crisil.com
Overview of CRISIL’s Outlook
According to a recent report by CRISIL, India’s Grade A office space leasing is projected to grow at a compound annual growth rate (CAGR) of 7–9%, reaching over 50 million square feet (MSF) by the financial year 2027. The strong growth outlook is driven by a resurgence in corporate expansion, increased demand from global capability centres (GCCs), and sustained interest from technology and financial services firms. This projection signals a healthy recovery and continued confidence in India’s commercial real estate sector…(Commercial Real Estate).
Tech and GCCs Drive Demand
One of the key demand drivers for Grade A office space remains the growing footprint of global capability centres, especially in Bengaluru, Hyderabad, and Pune. These centres are expanding operations as companies look to diversify and de-risk global business processes. The technology sector also continues to play a major role, accounting for a significant portion of leasing in the top 7 cities. With flexible work models becoming more structured, occupiers are now seeking high-quality, well-located office spaces with long-term leases.
Focus on Quality and Sustainability
CRISIL notes a distinct shift toward sustainability and workspace efficiency. Grade A office spaces that are IGBC or LEED certified are gaining more traction as corporates aim to meet ESG goals. Tenants are increasingly prioritizing buildings with green certifications, smart technologies, and employee wellness features. This is reshaping the development pipeline, with developers now integrating ESG metrics right from the planning stage.
City-Wise Leasing Patterns
The top 6–7 cities including Mumbai, Bengaluru, NCR, Pune, Hyderabad, and Chennai continue to dominate leasing activity, accounting for the bulk of demand. Bengaluru remains the leader in overall leasing volume, followed by Hyderabad and Mumbai. NCR’s office market is regaining momentum, supported by large floor plate availability and upcoming metro connectivity. Tier-2 cities, while still small in scale, are beginning to see interest from smaller tech firms and start-ups seeking cost-effective options.
Investor and Developer Confidence
The report also underlines increased participation from institutional investors in India’s commercial real estate space. REITs and private equity funds are showing renewed interest in Grade A office portfolios, driven by consistent rental yields and high occupancy rates. Developers are also realigning their portfolios to include more core commercial assets and are focusing on pre-leased models to attract long-term capital.
Conclusion and FY27 Outlook
Overall, the outlook for India’s Grade A office space is robust, with expected leasing activity set to cross 50 MSF by FY27. As companies continue to formalize hybrid work strategies, and India strengthens its position as a global back-office hub, high-quality office spaces are expected to stay in high demand. CRISIL’s forecast underscores both optimism and opportunity in the post-pandemic commercial property landscape.
q1. What is Grade A office space?
Grade A office spaces are premium buildings with modern infrastructure, location advantages, and top amenities.
q2. What is the projected growth rate till FY27?
CRISIL estimates a 7–9% CAGR in leasing of Grade A office space in India.
q3. What is the expected leasing volume by FY27?
Leasing is forecasted to exceed 50 million square feet (MSF) by FY27.
q4. Who are the major demand drivers?
IT/Its, Global Capability Centres (GCCs), and flex space operators are key drivers.
q5. Which cities are leading in leasing activity?
Bengaluru, Hyderabad, Mumbai, and NCR continue to dominate office space absorption.
