Net office leasing may rise 10-11% in FY25 across 6 major cities: Icra

Rating agency Icra on Thursday said the net absorption of office space across six major cities is likely to rise 10-11 per cent to 590-600 lakh square feet this fiscal year.

In a statement, Icra said that the net leasing of offices across the top six cities (Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai Metropolitan Region (MMR) and Pune) in India is likely to increase by 10-11 per cent to 59-60 million (590-600 lakh) square feet in 2024-25 and witness a further growth of 3-4 per cent in the next fiscal on a high base.

Despite an influx of a huge supply of 125-130 million (1,250-1,300 lakh) square feet in 2024-25 and 2025-26, the vacancy levels are expected to remain range-bound at 14.5-14.7 per cent by March 2025 and improve to 14-14.5 per cent by March 2026, supported by resilient absorption trends.

Anupama Reddy, Vice President and Co-Group Head, Corporate Ratings, Icra, said the leasing activity remained firm with net absorption of around 54 million square feet in 2023-24 and 44 million square feet in the first nine months of this fiscal for the top six office markets in India.

The high demand is supported by strong demand from Global Capability Centres (GCCs) and domestic corporates, an increase in physical occupancy in office spaces and a revival of IT-SEZs with regulations around floor-wise de-notification, Reddy added.

On the outlook of office demand, Peush Jain, MD-Commercial Leasing and Advisory, Anarock Group, said the office sector growth is expected to stay buoyant with supply to touch a billion square feet by the end of 2025 with record leasing activity led by GCCs and flex space operators.