NEW DELHI: The net leasing of grade A commercial office space in India is expected to grow by 10-12% to 41-43 million sq ft in FY25, driven by higher-than-expected leasing demand from global capability centers (GCCs), banking, financial services and insurance (BFSI) and manufacturing sectors, according to a report by Crisil Ratings.
Improved absorption will stem rising vacancy levels, partly aided by denotification in underperforming special economic zones (SEZs) units.
Net leasing will pick up pace this fiscal after four years of gradual recovery, while commercial office supply is expected to remain high, similar to last fiscal, the report said.
GCCs, which encompass all sectors, are expected to account for 40-45% of India’s total net leasing this fiscal as new entrants set up office spaces and existing ones expand their footprint.
Gautam Shahi, director of CRISIL Ratings, said, “The vacancy level, which had shot up 600 basis points (bps) between fiscal 2020 and 2024 amid the pandemic, is expected to plateau at 17.4-17.5% this fiscal.”
Information technology (IT)/ IT-enabled services (ITeS) companies, which account for 20-25% of overall demand, will grow in low single digits due to tepid growth of domestic firms though demand from IT/ITeS GCCs will hold steady.
Healthy demand from the engineering and manufacturing, and BFSI sectors, which together account for 35-40% of net leasing demand, will be driven by continued growth of the Indian economy and offshore demand through GCCs.
