Office space absorption to grow 12-18% next fiscal

BENGALURU: Net leasing of commercial office space across the country will grow 12-18% to 25-30 million square feet (msf) in the next fiscal, riding on a low base of the current fiscal, gradual return of tenants to offices, and improvement in the macroeconomic situation, a CRISIL analysis shows.

“Despite this, net leasing next fiscal will be below pre-pandemic levels as the impact of work-from-home will continue to weigh on leasing decisions of corporates. The credit profiles of commercial real estate owners are expected to resist the hiccups due to pandemic, ” the study mentioned.

Despite the pandemic-led disruption, credit profiles of players to largely remain stable
Study of CRISIL Ratings’ rated universe of 37 companies owning 86 assets, with debt of around Rs 30,000 crore and total leasable area of around 100 msf (~20% of the entire operational stock in top 6 cities) suggests healthy cushion in debt servicing can withstand the marginal build-up of vacancy or pressure on rental rates.


Between fiscal 2018 and 2020, net leasing of commercial office space clocked a healthy compound annual growth rate (CAGR) of 15-20%, with Hyderabad, NCR, and MMR accounting for the bulk of the pie. This was driven by healthy pace of employee addition (6-7% CAGR in the past 3-4 years) in the IT/ITeS and BFSI sectors.