Office leasing is in a good space

Grade-A office spaces are seeing faster absorption buoyed by favourable demand-supply dynamics, thus pushing vacancies lower.

- Harsha Jethmalani [e-mail]

All-India (aggregate of top 7 cities) vacancy levels in Q3FY26 declined to 12.3% from 12.7% in Q2 and 13.9% in Q3FY25, Propstack data compiled by Kotak Institutional Equities showed.

Global capability centres (GCCs) and flexible-space operators continue to dominate demand. Once a heavyweight, the share of information technology (IT) sector in the leased area has fallen to 30% from 43-45% three years ago.

Amid worries of artificial intelligence (AI)-led disruption to traditional IT business models, a likely reduction in hiring by IT firms could drag the sector's leasing share lower. Fortunately, GCCs are holding the fort, setting off the adverse impact. ICICI Securities estimates pan-India Grade-A net absorption of 55 million square feet (msf) in 2026, 58 msf in 2027 and 61 msf in 2028, with over 50% of this demand to be driven by GCCs.