Committed occupancy levels – office spaces where leases have already been signed with tenants but are yet to commence – for key listed real estate investment trusts (Reits) exceeded the 90% mark in FY26. Management executives at Reits are largely upbeat on demand prospects, providing room for occupancy improvement.
Embassy Office Parks REIT sees occupancy rising to 92-93% and Brookfield India Real Estate Trust pegs it at 96%. Mindspace Business Parks REIT anticipates the reading to reach about 97%, excluding the Pocharam property in Hyderabad, which may be divested.
To achieve these targets, the pace at which Reits are able to lease new spaces is crucial. These companies were on an organic and inorganic expansion spree in FY26 to tap potential demand. But the West Asia war has triggered macro-economic concerns, which can be a roadblock for office leasing.
Prime Minister Narendra Modi recently appealed to businesses to re-introduce work from home (WFH) and virtual meetings to cut fuel consumption. As per media reports, companies that have opted for hybrid/WFH include RPG Group, PwC India, IndusInd Bank and HDFC Bank.
Large-scale adoption could become a déjà vu moment for office leasing, harking back to when demand took a hit in the aftermath of the covid-19 pandemic, leading to elevated vacancies and stagnating rents. Over FY21-23, higher exits—predominantly by IT/ITeS firms—dragged net leasing down, said Nuvama Research. The exits moderated thereafter and net leasing started improving in FY24.
The Indian IT sector is facing troubles of its own and consequently, its share in office space leasing has declined. Global capability centres (GCCs) have lately been at the helm of driving Grade-A office demand in India. But nervousness is creeping in.
GCCs are typically companies of foreign origin that set up their back-office operations and R&D activities in India.
Rupee depreciation
Of the 7.1 million square feet (msf) of gross leasing by Mindspace in FY26, about 50% was to GCCs. The management said on its Q4FY26 earnings call that there was some slowdown in decision-making owing to the war. That said, the depreciation of the Indian rupee has made the country more attractive and Mindspace expects leasing activity to resume soon.
Brookfield said the leasing outlook remains steady, albeit with some delays owing to geopolitical tensions. Brookfield achieved a record 4 msf of gross leasing in FY26, with almost half of the share from GCCs. For Embassy, GCCs accounted for almost 60% of leasing in FY26.
Faster absorption of office units has kept rentals steady, but any further rise in the current backdrop could be slow. The average monthly Grade A office rental in the top seven Indian cities increased by 6% in 2025 to ₹92 per square foot and inched up to ₹93 per sq ft in Q1CY26, data from Anarock Property Consultants showed. Rental outlook is also a function of upcoming supply of new office spaces.
“Since key listed Reits are already at 90% committed occupancies, negative impact due to delay in decision-making by MNCs seems to be limited currently. Still, most Reits are refraining from giving out any guidance on DPU (distribution per unit) growth,” said Karan Khanna, lead analyst, small & midcaps, hotels & properties at Ambit Capital.
DPU is the income (rental income or dividend) that a Reit pays its investors for each unit they hold. Only Embassy REIT has given a DPU guidance of 10% year-on-year growth for FY27.
“The war has now become a black swan event like the covid-19 pandemic, and the tech sector news flow of mass layoffs is sentimentally negative,” Khanna added.