GCCs lift India office leasing as third-party IT demand falls 36%

What happened

Knight Frank India’s office-market report, released on 12 October 2026, covers leasing in eight major Indian markets for January to September 2026. Total transactions reached 66.7 million sq ft, close to the 2025 level for the same nine months.

The composition of that total changed. Leasing by GCCs rose 10.4% to 27.4 million sq ft. 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, making them the second-largest contributor after GCCs.

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. In the release he said, “GCCs are rapidly expanding their footprint.”

Who is driving the shift

Shirish Godbole, CEO of Knowledge Realty Trust (KRT), described by the trust as India’s largest REIT by market capitalisation, told Business Standard on 3 November 2026 that GCCs and front-office occupiers were driving office demand.

• KRT’s gross leasing was 0.8 million sq ft in Q2 FY27 and 2.2 million sq ft in the first half of FY27.
• GCCs made up 42% of KRT’s total demand, against about 30% four years earlier.
• KRT’s Q2 FY27 leasing comprised 0.5 million sq ft of new leasing, 0.1 million of renewals and 0.2 million of pre-leasing.
• Named Q2 FY27 deals included a 188,000 sq ft lease to a global corporate administration firm at Sattva Endeavour and a 56,000 sq ft GCC lease to a large US mutual fund manager at Sattva Knowledge City.

Godbole also said that tighter visa and immigration policies in Western countries could benefit Indian REITs. This is his view and has not been confirmed as a trend in the leasing data.

Separately, CareEdge Ratings put GCCs at 48% of office leasing in Q1 2026, against 44% a year earlier. The figure uses a different measure from Knight Frank’s and is reported separately.

City detail: Bengaluru and Hyderabad

Bengaluru remained the largest GCC destination, with 9.8 million sq ft of GCC-focused transactions in January to September 2026, or 36% of the GCC total across the eight markets. Bengaluru’s prime rents rose 11.5% in Q3 2026 according to a Whalesbook report, and its vacancy rate was 13.4%. That rent measure differs from Knight Frank’s transacted-rent data.

Hyderabad led Q3 2026 leasing with 5.6 million sq ft, up 92% year on year and 30% of national quarterly leasing. Vacancy fell to 11.8% in Q3 2026 from 13.3% a year earlier, even though 9.7 million sq ft of new space was completed in the first nine months of 2026, more than three times the 3.0 million sq ft delivered a year earlier. An Anarock Research and FICCI report says Hyderabad hosts more than 515 GCCs employing over 300,000 people. Anarock puts average office rents in the city at about Rs 75 per sq ft per month, below the pan-India average of Rs 96, although this is an older measure than Knight Frank’s Rs 82 for Q3 2026.

The western corridor, covering HITEC City, Gachibowli, Financial District and Kokapet, is expected to remain the centre of Hyderabad’s commercial expansion. Telangana has proposed a 122.9 km Hyderabad Metro Phase-II expansion estimated at Rs 38,595 crore, and the Regional Ring Road is expected to improve connectivity to emerging development corridors.

Market conditions

Vacancy edged up to 14.7% in Q3 2026 from 14.5% a year earlier. Knight Frank attributes this to the timing and location of completions rather than weaker occupier demand. Rental growth stayed positive in all eight markets in Q3 2026, with transacted rents up between 3% and 13% year on year.

Listed office REITs show a similar pattern. CareEdge reports that average occupancy rose from about 84% in FY24 to about 92% in FY26, and that rental income across listed office REITs grew about 20% between FY25 and FY26. CareEdge’s Divyesh Shah said geopolitical uncertainty could temporarily delay leasing decisions by multinational occupiers but was unlikely to materially affect occupancy at listed office REITs.

Bagmane Prime Office REIT reported 1.2 million sq ft leased in Q2 FY27 (quarter ended 30 September 2026), taking committed occupancy to 99%. GCCs accounted for 96% of the new space taken. The REIT said its new leases were signed at Rs 166 per sq ft per month.

What it means for buyers and investors

The reports cover office leasing, not residential prices, so they do not show a direct effect on home prices. For office investors and REIT unitholders, the data points to GCC occupiers becoming the main source of new demand, while third-party IT occupiers take less space.

• Leasing in Hyderabad and Bengaluru is concentrated in a small number of submarkets, so location matters for occupancy and rent.
• New supply rose sharply in 2026, which keeps vacancy an important figure to watch even where demand is strong.
• REIT figures come from different measures and periods, so headline occupancy and rent numbers should not be compared directly across consultants.

Consultants report different totals because they use different city sets and deal definitions. For January to September 2026, Colliers reports 15.7 million sq ft for Bengaluru, Knight Frank 16.7 million and Savills 18.0 million. Savills’ nine-month national figure, dated 16 October 2026, is 60.7 million sq ft, against Knight Frank’s 66.7 million.

What comes next

• 5 November 2026: record date for Bagmane Prime Office REIT’s quarterly distribution.
• Q4 2026: Knight Frank says the office market is entering the final quarter of 2026 with a broader base of occupier demand.
• FY27: CareEdge expects occupancy across listed office REITs to remain above 90%.
• Over the next three to five years: Anarock estimates GCC expansion could add another 8 to 12 million sq ft of office demand in Hyderabad.
• By CY2031: CareEdge says more than 150 million sq ft of office space is expected to become REIT-eligible. No dates were given for individual additions.

Anarock’s Anuj Puri said GCC expansion is already translating into significant real estate demand in Hyderabad.