ICRA has said net leasing of office space across six major cities is estimated to decline by 10 per cent this fiscal (FY24), from 57 million square feet in the previous year. These top six cities are Mumbai, Bengaluru, Delhi-NCR, Hyderabad, Chennai, and Pune. Its sample includes 22 commercial office operators totalling 165 million square feet area.

The fall in office demand coupled with an influx of huge supply in FY24, would result in a marginal rise in vacancy levels by 60 basis points to 15.5 per cent by the end of FY24. It stated ‘The office developers are expected to witness a revenue growth of 11-13 per cent in FY2024 for ICRA's sample set of non-REIT companies, supported by scheduled rent escalation and improvement in occupancy levels of reputed office players.’

Further, it said the rental rates are estimated to rise by 3-5 per cent YoY in FY24, driven by contracted escalations/lease renewals at higher rates. ICRA's outlook on the commercial office sector is 'stable'.