Office leasing holds level as GCCs offset a 36% drop in IT tenants

Office leasing across eight major Indian cities was 66.7 million sq ft in the first nine months of 2026, roughly level with the same period of 2025, according to a Knight Frank India report released on 12 October 2026. Within that total, the mix of tenants changed sharply, with global capability centres (GCCs) taking up more space while third-party IT and IT-enabled services firms leased less.

Demand is moving toward GCCs

GCC leasing rose 10.4% year on year to 27.4 million sq ft, from 24.8 million sq ft in the first nine months of 2025. GCCs made up 41% of office transactions, up from 37% a year earlier and 31% in 2024. Leasing by third-party IT and ITeS companies fell 36% to 9 million sq ft from 14.1 million sq ft. Flex operators leased 16.1 million sq ft, or 24% of the total.

Shishir Baijal, Chairman and Managing Director of Knight Frank India, said the nature of demand was changing, with GCCs expanding and flexible workspace operators and India-facing businesses contributing significantly. He said: 'GCCs are rapidly expanding their footprint.'

Leasing in the July to September quarter was 18.7 million sq ft, up 5% year on year and 3% on the previous quarter. Vacancy rose to 14.7% from 14.5% a year earlier. Knight Frank said the increase reflected the timing and location of new completions rather than weaker occupier demand. New completions across the eight cities were 48.6 million sq ft in the nine months, 50% higher than a year earlier. Average transacted rents rose between 3% and 13% year on year across the eight markets in the quarter.

What listed REITs reported

Knowledge Realty Trust (KRT), which describes itself as India's largest REIT by market capitalisation, reported a 15% rise in net operating income (NOI) to ₹1,140.4 crore for Q2 FY27, ahead of 13% revenue growth. Its NOI margin was 90%. It distributed ₹1.72 per unit, against ₹1.56 a year earlier. Gross leasing was 0.8 million sq ft in the quarter and 2.2 million sq ft in the first half of FY27. KRT's CEO, Shirish Godbole, said GCCs made up 42% of the trust's total demand, against about 30% four years earlier. Bengaluru and Mumbai each contributed 0.3 million sq ft of the quarter's leasing, and Hyderabad 0.2 million sq ft.

Bagmane Prime Office REIT, reporting for the quarter ended 30 September 2026, said it leased 1.2 million sq ft, up from 260,000 sq ft in the previous quarter. Committed occupancy reached 99%, and GCCs accounted for 96% of the new space taken up. New leases were signed at ₹166 per sq ft per month. The trust's record date for its quarterly distribution is 5 November 2026.

Sector views and figures to watch

CareEdge Ratings said average occupancy across listed office REITs rose from about 84% in FY24 to about 92% in FY26, and that their rental income grew about 20% between FY25 and FY26. It expects occupancy to stay above 90% in FY27. Its director, Divyesh Shah, said geopolitical uncertainty could temporarily delay leasing decisions by multinational occupiers but was unlikely to materially affect occupancy at listed office REITs. CareEdge also said more than 150 million sq ft of office space is expected to become REIT-eligible by CY2031.

Godbole said tighter visa and immigration rules in Western countries could benefit Indian REITs. This is his view and not a confirmed effect. The consultants' totals also differ. For Bengaluru, Savills reported 18.0 million sq ft of leasing for 2026 to date, Knight Frank 16.7 million and Colliers 15.7 million. The reports use different city sets and deal definitions, so the figures are not directly comparable.

Anarock estimates GCC expansion could add another 8 to 12 million sq ft of office demand over the next three to five years. Investors will watch whether the GCC share of leasing keeps rising and whether vacancy eases as completions are absorbed.