The Office Location (SPS-Location) property in user Profile is being fetched from termset which is blank in my case. I want AAD property Office to be populated in this user profile proerty. I tried creating a new property in SP Online but unable to map it to office. Any pointers in populating the existing property or create a new office location property?
You would need to populate the TermSet (or have users populate their own profile) and edit your user's profile with this information. You cannot change the mapping. The
Office value is populated from the Azure AD attribute
PhysicalDeliveryOfficeName which you may consider populating. This also has an identically named attribute in Active Directory should you be using AAD Connect.