Committed occupancy levels for key real estate investment trusts exceeded 90% in FY26, with positive demand outlook. However, geopolitical tensions and a potential shift back to remote work could hinder leasing activity, impacting the office space market.
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.
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.
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.
Harsha Jethmalani
Harsha Jethmalani is a Deputy Editor at Mint with over a decade of experience covering stock markets and corporate India. As a key member of the Mark to Market team, she specializes in delivering cutting-edge commentary on market trends, the economy, and corporate financial reports.Born and raised in Mumbai, Harsha’s entry into business journalism was a serendipitous pivot. Graduating during the 2008–2009 financial crisis, her initial goal of becoming a research analyst at an MNC was rerouted. However, what began as a chance career move quickly became a conscious choice; she discovered that financial journalism is a powerful storytelling tool capable of influencing and empowering the financial decisions of a massive audience.Harsha began her career in 2009 at IRIS Business Services (Myiris.com), tracking mutual funds and interviewing fund managers. In 2011, she joined the Network18 Group, writing extensively on equity market trends for Moneycontrol.com and hosting pre- and post-market audio updates. Following a stint covering personal finance at Dalal Times, she joined Mint in 2016 as a Content Producer, steadily rising through the ranks to her current editorial position.A defining highlight of her tenure at Mint was her extensive coverage of India's historic Goods and Services Tax (GST) reform. She chronicled the massive indirect tax overhaul from its initial conceptual and execution hurdles to its eventual streamlining. Her impactful reporting earned official recognition when her article exposing a spike in gold smuggling ahead of the GST rollout was formally acknowledged by the Office of the Director General of Audit (Central), Kolkata. Currently, Harsha closely tracks the IT, cement, real estate, and paint sectors. Her sharp news sense and ability to spot emerging trends consistently bring fresh, actionable perspectives to market analysis.She holds a postgraduate degree in financial markets from Indira Gandhi National Open University and a Bachelor of Management Studies from Vivekanand Education Society, Chembur, Mumbai.