The Rise of Office REITs: A New Asset Class in the Making?

The office REIT space is evolving fast and a new narrative is emerging: lists of institutional-quality, Managed Office assets being bundled into REITs—a hybrid approach that blends stability with operational agility.

What do you mean by REITs? Let's take a look!

Investors can take certain economically productive real estate, like office buildings, retail shopping centres and warehouses and together own shares of it through the REIT investment structure. Trends in Office REITs: A Sector on the Move

1. India’s REIT Market Gathers Momentum

• India’s office REIT landscape is valued at approximately USD 17 billion, dominated by three major players—Embassy, Mindspace, Brookfield—managing ~117 million sq ft (~23% of Grade A office stock)
• Despite being a late entrant (REITs listed since 2019), Indian office REITs already account for ~13% of total Grade A office space, with major room for more listings and consolidation across top cities.

2. GCCs Fuel Leasing Demand—And the REIT Case

• Global Capability Centres (GCCs) are fueling demand: they now account for 40–60% of leasing in office REIT portfolios, compared to only ~28–29% in the broader office market—making REIT assets the preferred institutional choice for multinationals.
• With a capital growth of more than 15% over the course of a year, office REITs in India have been outperforming the BSE Realty Index and drawing in both domestic and foreign investors.

3. Global Backdrop: Non-Traditional REIT Sectors Thrive

• With a combined market value of almost USD 2 trillion, REIT regulations are currently in place in more than 35 countries worldwide.
• In mature REIT markets, non-traditional property types—like data centres, cell towers, etc.—contribute over 50%. Office REITs remain core but face valuation and occupancy headwinds.

4. Market Validation: Embassy REIT Sets New Benchmark

• Embassy Office Parks REIT (India’s first and Asia’s largest office REIT) raised ₹2,000 crore via a 10‑year NCD, signaling confidence in long-term capital structure—with strong institutional appetite.

5. Risks & Realities

• Even though the office REITs have performed well in the premium Grade-A segments, the overall office market remains complex: U.S. office NOI dropped by ~0.9% in Q1, and the occupancy rate in privately held Grade B and C assets remains stagnant, stuck below the pre-pandemic benchmarks.
• Concerns about possible conversion risks for older or less utilized assets continue to make investors nervous.

What to Watch

• New REIT listings: Knowledge Realty Trust (backed by Blackstone + Sattva) is expected soon, with ~48M sq ft across India’s top real estate markets.
• Diversification plans: REIT platforms expected to expand into Managed Office, logistics, retail and co-living segments in coming years.
• Global comparisons: Watch similar trends in markets like Australia, where office REITs trade at deep NAV discounts—creating entry points for value investors.

The Rise of Managed Office REITs: A Concept Taking Shape While traditional office REITs have dominated the landscape with long-term leases and Grade A commercial assets, a new format is quietly entering the picture: Managed Office REITs.

India’s first example of this model is already live—EFC (I) Limited, a Pune-based managed office space provider, filed to raise ₹760 crore through its IPO and REIT-like structure, backed by a portfolio of plug-and-play Managed Offices across multiple cities.

Managed Office operators like Incuspaze (India)—which now spans ~4M sq ft—are offering plug‑and‑play, tech‑enabled, enterprise-grade workspaces. There is now an opportunity to create new REIT formats based on the Managed Office model which is ready for accumulative growth on an institutional level. Meanwhile, India’s listed office REITs currently cover only ~23% of REIT‑eligible Grade A inventory, highlighting a large opportunity. If Managed Office operators scale effectively, there could be a case to launch dedicated REITs or sub‑formats focused on managed workspaces.

What does it mean for the future of Office Real Estate

In the context of the future of commercial real estate, how people work in and occupy buildings is far more important than their mere ownership.

Managed Office REITs marked a bold evolution of the office asset class, prioritizing services like space utilization, agile services, and leasing as opposed to stagnant contracts that offered mere square footage. Moreover, while regulations may take some time to catch up, the market is already responding to tenant demand and investor appetite.

It won't be defined by monolithic office buildings instead it will be managed by fluid, adapted ecosystems attuned to dynamic employee workflows.