India’s Grade A office leasing demand is projected to grow by 8-10% in FY26, reaching 47-49 million sq ft, fueled by robust demand from the banking, financial services and insurance (BFSI) sector, global capability centres (GCCs), and the expanding presence of flexible workspace operators, according to Crisil Ratings. This growth will follow a 14-16% surge in the current fiscal, surpassing pre-pandemic levels and earlier market expectations.
GCCs will remain a dominant force, accounting for 30-40% of net leasing activity across IT/ITeS, BFSI, and manufacturing sectors. With the emergence of new GCCs and the expansion of existing ones, cities like Bengaluru and Hyderabad are expected to capture nearly two-thirds of the demand from this segment.
Double-digit growth in net leasing next fiscal will be driven primarily by BFSI players and flex space operators. Non-banking financial companies and private sector banks will expand steadily due to increasing assets under management and workforce growth. Meanwhile, flexible space operators will grow rapidly in Tier I and II cities, offering cost-effective, hybrid-friendly solutions. In contrast, growth in IT/ITeS and manufacturing segments will be moderate, with mid-single-digit increases in demand.”
On the supply side, Grade A office space completions are estimated at 52 million sq ft for the current fiscal, followed by 55-58 million sq ft in FY26. Bengaluru and Hyderabad will account for nearly half of this new supply, driven by GCC demand. Despite the influx of supply, vacancy rates are expected to decline slightly to around 17% over the next two fiscals due to steady leasing growth.
The debt-to-EBITDA ratio is projected to remain stable at 4.3-4.5 times for the current and next fiscal, reflecting healthy credit profiles even as players expand their portfolios,"
However, potential risks remain. Slower economic growth or global regulatory changes that affect hiring and business expansion could impact leasing demand. Prudent financial management and sustainable leverage will be critical to maintaining stability in the sector.
The office leasing momentum, coupled with a strong supply pipeline, positions India’s commercial real estate sector for continued growth, especially in Tier I cities, with an increased focus on agile and green-certified workspaces.