India’s commercial office market is entering a phase of unprecedented tightness as strong leasing demand continues to outpace new supply. According to a latest assessment by ICRA, vacancy levels across the top six office markets are expected to fall to historic lows by FY2027, backed by record net absorption and sustained interest from global and domestic occupiers.
The rating agency estimates that net absorption of office space in Bengaluru, Chennai, Delhi NCR, Hyderabad, Mumbai Metropolitan Region (MMR) and Pune will hit an all-time high of 69-70 million square feet in FY2026. Leasing momentum is expected to remain strong into FY2027 as well, with absorption likely to exceed 65 million square feet next year. For the third straight year, demand is projected to outstrip fresh supply, tightening vacancy levels across key markets.
As a result, overall vacancy is forecast to decline to 12.5–13% by March 2026 and further to 12-12.5% by March 2027, levels not seen in the sector’s recent history. The slide in vacancy reflects the growing depth of occupier demand, especially from global firms expanding their India operations.
The momentum is already visible in current numbers. Net absorption stood at 66 million square feet in FY2025, recording a healthy 15% year-on-year growth and surpassing the 58 million square feet of new supply added during the year. The first half of FY2026 has continued this trend, with 36 million square feet of net absorption against fresh supply of 30.6 million square feet. Vacancy, which stood at 15.6% in March 2024, eased to 14% by March 2025 and fell further to 13% by September 2025.
Demand is being led by three major segments: Global Capability Centres (GCCs), flex-space operators, and the banking, financial services and insurance (BFSI) sector. Despite global uncertainties such as policy tightening and trade restrictions in the US, leasing by GCCs in India has remained resilient. ICRA expects GCCs alone to lease 50–55 million square feet between April 2025 and March 2027, accounting for nearly 40% of incremental office demand during this period.
The rapid expansion of GCCs has become one of the strongest long-term growth engines for India’s office market. Over FY2024 and FY2025, GCCs already accounted for about 35–37% of total net absorption. Their continued appetite for space signals a strategic shift by global companies to deepen their operational base in India. Several state governments are also supporting this trend with incentives, skill development programmes and infrastructure upgrades to attract more global investments.
At a city level, Bengaluru continues to lead the market in absolute leasing volumes. Vacancy in the tech hub is projected to decline sharply from 9.2% in September 2025 to 7.5–8% by March 2027, reflecting sustained demand and limited oversupply. Chennai is expected to see one of the tightest markets over the next two years, with vacancy likely to fall to 5.5–6%, largely due to restricted new supply.
Delhi NCR, which currently has the highest vacancy among the top six cities, is also expected to see a gradual improvement. Vacancy here is projected to ease from about 21% to 19.5–20% by March 2027 as absorption continues to strengthen. Hyderabad and Pune are expected to maintain relatively stable vacancy levels, while MMR is likely to witness a further decline, driven by steady demand from financial services and corporate occupiers.
With vacancy levels tightening and leasing visibility improving, investor interest in commercial real estate assets is also expected to remain strong. ICRA notes that debt protection metrics across office developers are improving, making the sector attractive for both domestic and foreign investors. Policy support and India’s growing strength in technology and talent continue to reinforce its status as a preferred global office destination.
Looking ahead, the outlook for India’s office market remains firmly positive. While macroeconomic and geopolitical developments will continue to influence business decisions, current indicators suggest that demand for quality office space will stay robust through FY2026 and FY2027. For landlords and developers, the coming years may mark one of the strongest cycles the office market has seen in over a decade.
