GCCs gain share of India's office leasing as demand mix shifts

MUMBAI: India’s office market is witnessing a shift in the composition of occupier demand, with global capability centres (GCCs), flexible workspace operators and domestic businesses accounting for a larger share of leasing even as space demand from traditional third-party IT services companies moderates.

Office leasing across eight major Indian cities stood at 66.7 million sq ft in the first nine months of calendar year 2026, broadly unchanged from the corresponding period last year, showed data from Knight Frank India.

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“India's office market continues to grow, even as global businesses operate against a more uncertain geopolitical backdrop. While the headline leasing numbers remain stable, the more important shift is in the nature of demand. GCCs are rapidly expanding their footprint, while flex operators and India-facing businesses are also contributing meaningfully to activity,” said Shishir Baijal, International Partner, CMD, Knight Frank India.

This, according to him, reflects India’s growing role in global capability building and domestic business expansion. With rents rising across all markets, the fundamentals remain healthy as we enter the final quarter.

The stability in overall volumes, however, masks divergent trends across occupier segments.

GCCs accounted for 41% of total office transactions during the January-September period, up from 37% a year earlier and 31% in 2024. Their leasing volumes increased 10.4% year-on-year to 27.4 million sq ft, making them the largest contributor to office demand.

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In contrast, leasing by third-party IT and IT-enabled services (ITeS) companies declined 36% to 9 million sq ft from 14.1 million sq ft in the year-ago period. The decline was driven primarily by lower activity in Bengaluru, Chennai and the National Capital Region, although Hyderabad recorded the highest leasing volume in this segment at 2.9 million sq ft.

The contrasting performance points to a changing demand profile in India's office market, where expansion by multinational companies through their GCCs is offsetting weaker leasing by traditional IT services firms.

Bengaluru remained the largest GCC market, accounting for 9.8 million sq ft, or 36% of GCC-focused transactions across the eight cities. Hyderabad recorded a sharper expansion, with GCC leasing rising nearly 70% year-on-year to 6.2 million sq ft during the nine-month period.

The momentum continued in the September quarter, when GCC leasing across the eight markets increased 19% year-on-year to 6.8 million sq ft. Hyderabad accounted for 42% of this quarterly volume.

Flexible workspace operators also strengthened their contribution, with leasing rising 14% to 16.1 million sq ft in the first nine months. They accounted for 24% of overall office transactions, making them the second-largest contributor to demand.

India-facing businesses leased 14.3 million sq ft during the period, up 3.5% from a year earlier and representing 21% of total transactions. Mumbai was the largest market for this segment, with 4.6 million sq ft, followed by the National Capital Region at 3.3 million sq ft.

The changing occupier mix comes as office supply expands. New completions across the eight markets rose 50% year-on-year to 48.6 million sq ft in the first nine months of 2026. Despite the increase in supply, rents recorded annual growth across all eight markets, while the national vacancy rate edged up to 14.7% in the September quarter from 14.5% a year earlier.