Net leasing of office space is likely to rise 6-7 per cent this fiscal across the top seven cities, but demand may be impacted due to geopolitical uncertainties, tariff-related issues and possible disruptions caused by artificial intelligence, according to Crisil Ratings.
The IT and ITeS sector is a major driver of office space demand in India. In view of global economic uncertainties, companies are cautious about expansion plans, a scenario that adversely impacts investments.
In a statement on Tuesday, Crisil Ratings also projected that the vacancy level in India’s Grade A commercial office space is expected to gradually decrease by about 50 basis points (bps) to 15.5-16.0 per cent by the end of the current fiscal.
Net leasing (measured in million square feet) reflects the net change in occupied space after accounting for both new leases and move-outs (vacated space) within the same period.
FY26 net leasing is estimated at around 48-49 million square feet.
The seven cities are Mumbai Metropolitan Region (MMR), Delhi-NCR, Bengaluru, Pune, Hyderabad, Chennai and Kolkata.
Gautam Shahi, Senior Director, Crisil Ratings, said, “Overall, the net leasing is expected to grow at 6-7 per cent this fiscal. However, this is exposed to risks related to disruptions in the IT/ ITeS sector on account of AI, which may impact hiring and expansions”.
Increased geopolitical uncertainties and tariff-related issues, too, may impact the leasing plans of GCCs (Global Capability Centres), he added.
“While these pose short-term challenges, India’s long-term structural advantages, including a large and skilled talent pool, cost competitiveness, policy-level support from central and state governments and broader economic stability, are expected to help the sector tide over the hiccups,” Shahi said.
Crisil Ratings mentioned that the current global uncertainties and challenges that could emanate from AI-led disruptions do pose risks to its projection of a decline in vacancy levels.