GCCs drive office leasing as third-party IT demand falls 36%: Report

India's office leasing market remained stable at 66.7 mn sq ft in 9M 2026 despite a 36% drop in leasing by IT services firms, as demand from Global Capability Centres (GCCs), flex spaces, and India-facing businesses surged, says a new report.

India's office leasing market remained stable at 66.7 million square feet in the first nine months of 2026, as rising demand from Global Capability Centres (GCCs), flexible workspace operators and India-facing businesses offset a sharp decline in leasing by third-party IT services companies, according to a report by Knight Frank India.

The report said office leasing across eight major Indian markets remained at the same level as in the corresponding period last year. However, the composition of demand changed, with GCCs increasing their share of total office transactions even as leasing by third-party IT and IT-enabled services (ITeS) companies fell 36 per cent year-on-year. It stated, “While overall leasing remained stable, the composition of demand continued to evolve. Third-party IT services leasing declined 36 per cent YoY in 9M CY2026, with growth in GCCs, flex and India facing occupiers largely offsetting the decline”.

Shift in Leasing Demand: GCCs Rise, IT Declines

GCCs accounted for 41 per cent of total office leasing in the January-September period of 2026, up from 37 per cent in the corresponding period last year and 31 per cent in 2024. Leasing by GCCs increased 10.4 per cent year-on-year to 27.4 million square feet from 24.8 million square feet in the first nine months of 2025, the report said.

In contrast, third-party IT/ITeS companies leased 9 million square feet during the period, down from 14.1 million square feet a year earlier. Their share of total office transactions stood at 13 per cent. The decline was mainly driven by lower leasing activity in Bengaluru, Chennai and the National Capital Region (NCR), while Hyderabad recorded the highest leasing volume in this category at 2.9 million square feet.

The growth in GCCs, flexible workspace operators and India-facing businesses largely offset the decline in third-party IT services leasing, keeping overall office demand steady. Shishir Baijal, International Partner, Chairman and Managing Director of Knight Frank India, said the market was seeing a change in the nature of demand, with GCCs expanding their presence and flexible workspace operators and India-facing businesses contributing significantly to leasing activity. "This reflects India's growing role in global capability building and domestic business expansion," Baijal said.

Office Rents See Annual Growth

The report also highlighted that the office rents recorded annual growth across all eight markets, ranging from 3 per cent to 13 per cent in the third quarter. Kolkata recorded the highest annual increase at 13 per cent, followed by NCR at 12 per cent and Hyderabad at 9 per cent. Mumbai recorded the strongest quarter-on-quarter rental growth at 4 per cent.

It said the office market was entering the final quarter of 2026 with a broader base of occupier demand and continued leasing activity, supported by the growing contribution of GCCs, flexible workspace operators and India-facing businesses. (ANI)

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