From global capability centres to office demand: What India’s commercial real estate boom means for REITs

At the centre of this shift are global capability centres (GCCs). Once associated largely with back-office support and cost efficiency, these centres are increasingly undertaking functions such as product development, data analytics, artificial intelligence, cybersecurity and research. Their changing role is influencing not only the nature of employment in India but also the demand for modern commercial real estate.

For investors looking at Real Estate Investment Trusts (REITs), this creates an important question: how does the expansion of corporate India translate into the performance of income-generating property?

The answer lies in understanding the relationship between office leasing, tenant demand, occupancy, rental income and the quality of the assets held by a REIT.

GCCs were an important contributor to this activity. JLL reported that these centres leased approximately 31.4 million square feet during 2025, accounting for 37.7% of gross office leasing. This represented an increase of 13.1% over 2024.

The figures point to a commercial real estate market supported by more than one source of demand. Global businesses are expanding their Indian operations, while domestic companies and flexible workspace operators are also competing for office space.

CBRE India’s March 2026 report, Decoding the GCC Surge: Insights into India’s Transforming Workspace Landscape, similarly identifies GCC expansion as a major influence on office demand. Its analysis found that GCCs leased more than 100 million square feet between 2022 and 2025, accounting for approximately 39% of total office leasing in 2025.

For commercial property owners, the significance extends beyond the amount of space leased. The nature of occupier demand, the quality of buildings sought and the duration of leasing commitments can all influence the stability of a property’s rental income.

As these centres take on more specialised functions, companies may require facilities that support collaboration, technology infrastructure, security, employee experience and access to skilled talent. Location also matters, with businesses evaluating connectivity, the availability of suitable office buildings and proximity to relevant talent pools.

This can create opportunities for owners of well-located, professionally managed office properties. However, the benefits are not distributed evenly across every building or market. Companies can choose between locations, negotiate lease terms and reconsider their space requirements as business conditions change.

For REITs, the implications depend on the assets they own and their ability to attract and retain tenants.

A property in a strong office market may still face challenges if it is poorly located, requires substantial investment or cannot meet occupiers’ expectations. Conversely, an established building with competitive amenities, efficient operations and access to talent may be better positioned to attract businesses seeking long-term space.

The key is to distinguish the broader growth of GCCs from the performance of an individual property portfolio. A growing sector creates potential demand, but it does not guarantee occupancy, rental growth or investment returns for every REIT.

When a company leases office space, the agreement establishes the contractual terms under which the property owner receives rent. The impact on a REIT’s financial performance depends on factors such as the size of the lease, the agreed rental rate, the lease duration, rent escalation provisions and the costs associated with operating the property.

Occupancy is an important indicator in this equation. Higher occupancy can support rental receipts, while vacancies may reduce income and increase the costs associated with finding replacement tenants. But occupancy should not be assessed in isolation: the rental rates secured, tenant quality, lease expiries and incentives offered to tenants also matter.

Rental growth is another factor worth examining. Where market conditions permit, property owners may secure higher rents when new leases are signed or existing agreements are renewed. Yet rental growth can vary considerably between cities, micro-markets and buildings. A rise in average office rents across a city does not mean that every property will achieve the same increase.

Investors should therefore examine the operating performance of the specific REIT rather than rely solely on headline office-market statistics.

Quarterly results and annual reports can help establish whether leasing momentum is translating into sustained rental income, improved occupancy and stronger cash flows. They can also reveal whether performance is being affected by vacancies, operating expenses, capital expenditure or changes in tenant concentration.

JLL’s 2025 office-market analysis found that Bengaluru accounted for 29% of annual gross leasing, followed by Delhi NCR at 20.9%. Mumbai and Hyderabad each accounted for 14% of the total. These figures illustrate the different contributions of major cities to the country’s office market.

For investors, city-level trends are only the starting point. Office performance can vary substantially within the same city, depending on connectivity, proximity to talent, competing supply and the quality of the commercial district.

A REIT with properties across several locations may have exposure to different economic and leasing conditions. This can help diversify its sources of rental income, although diversification does not eliminate the risks associated with a downturn in office demand or changes in corporate leasing behaviour.

The geographical composition of a portfolio should therefore be considered alongside its tenant mix, occupancy levels and lease maturity profile.

Corporate leasing decisions are influenced by business confidence, economic conditions, technology, workforce planning and the cost of occupying space. Companies may consolidate offices, delay expansion or redesign their workplaces. Changes in the use of artificial intelligence and other technologies may also influence future staffing and workspace requirements, although the scale and timing of these effects will vary by business.

New office supply is another consideration. If additional space enters a market faster than occupier demand grows, landlords may face greater competition for tenants. This can influence occupancy, leasing incentives and rental growth.

For REITs, the effect depends on the resilience of the existing portfolio and the trust’s ability to manage vacancies, renew leases and maintain operating efficiency. Debt levels, financing costs and planned capital expenditure also affect how much cash is ultimately available to investors.

These risks make it important to look beyond gross leasing figures. Market-wide demand may remain healthy even as individual buildings experience vacancies or pressure on rents.

Occupancy levels: Are the properties maintaining or improving the proportion of space occupied by tenants? Persistent vacancies can affect rental receipts.

Lease expiries and renewals: When do major leases expire, and how much rental income depends on a limited number of tenants? A concentrated expiry schedule may increase uncertainty around future cash flows.

Rental growth: Are new leases and renewals being concluded at competitive rates? Headline city-wide rental growth should be compared with the performance disclosed by the individual trust.

Tenant concentration: How dependent is the portfolio on a few large occupiers, sectors or geographical markets? A diversified tenant base can reduce dependence on any single company, although it cannot remove broader market risk.

Financial performance and valuation: Are operating income and distributable cash flows developing sustainably? Investors should also assess borrowing, refinancing requirements, capital expenditure and the market price of units relative to the disclosed value of the underlying assets.

These indicators help connect the macroeconomic story to the investment itself. The expansion of GCCs may support demand for quality offices, but the financial outcome for unitholders depends on the performance, management and valuation of the assets held by the REIT.

For the REIT market, this creates a potential opportunity to participate in the underlying economics of professionally managed commercial property through listed units rather than direct ownership.

Yet the investment case is not simply that more companies need offices. Individual properties must attract tenants, secure competitive leases, manage costs, and sustain cash generation over time.

That distinction is central to evaluating REITs. Strong office leasing can provide a favourable market backdrop, but it does not automatically translate into higher distributions or rising unit prices. Investors still need to examine the underlying portfolio, its financial performance, and the price at which they invest.

As India’s commercial real estate market evolves, the most useful question for investors is not just how much office space companies are leasing, but how effectively that demand is being converted into durable rental income and long-term property value.