Global Capability Centres leased 19.2 million square feet in H1 2026, driving a 9% rise in office rentals. This demand, led by Bengaluru and Hyderabad, has lowered national vacancy rates to 15%. For investors, the trend indicates strengthening fundamentals in commercial real estate as developers limit new supply.
India's commercial real estate market showed strong momentum in the first half of 2026, largely powered by the rapid expansion of Global Capability Centres (GCCs). Data reveals that these centers accounted for 45% of the total 42.6 million square feet of office space leased across the country's seven major cities during this period, up from a 41% share a year earlier.
Impact on Market Fundamentals and Rentals
The office market has entered a phase of improved health, driven by a strategic balance between demand and supply. While leasing activity remained robust, developers adopted a cautious approach toward new projects. New office completions dropped by 10% to 22.15 million square feet, while net absorption—the amount of occupied space—rose by 2% to 27.44 million square feet. This combination of steady demand and controlled new construction helped push average office rentals up by 9%, reaching ₹96 per square foot compared to ₹88 in the same period last year.
Regional Performance and Growth Drivers
Southern cities have become the primary hubs for this activity. Bengaluru remained the dominant market, recording 10.8 million square feet of gross leasing, with GCCs taking up 70% of that space. Chennai and Hyderabad also saw significant GCC participation, contributing 55% and 48% to their respective gross leasing volumes. These two cities, Bengaluru and Hyderabad, together represented nearly 50% of India's net office absorption in the first half of the year, reflecting a 26% and 24% year-on-year increase, respectively.
Diversification and Future Trends
While GCCs are a major catalyst, the demand base is broadening. The traditional IT and ITeS sector continues to lead with a 26% market share, closely followed by flexible workspace providers at 25%. Expanding footprints from the banking (BFSI), manufacturing, and industrial sectors further support this growth. The tighter vacancy rate of 15%—an improvement from 16.3% a year ago—suggests that landlords may continue to see pricing power in key office corridors. Investors monitoring this space should track future supply additions, as developers' discipline in new construction remains crucial to sustaining the current rental growth and managing vacancy levels in cities like Hyderabad, which still reports higher vacancy compared to other major urban centers.