Infrastructure-led growth reshapes demand as firms expand cautiously
MUMBAI, Jan 11 (Ther CONNECT) – With the Union Budget 2026 around the corner, the commercial real estate sector is bracing for continuity rather than headline-grabbing incentives — a direction that industry leaders say is well-suited to the evolving needs of office occupiers.
Utkarsh Kawatra, CEO and Co-Founder of myHQ by ANAROCK, said the absence of dramatic announcements for office real estate should not be read negatively. “For offices, stability and predictability matter far more than incentives,” he said, noting that companies plan expansions based on policy clarity and confidence in the economy’s direction rather than short-term tax benefits.
“This Budget is expected to signal continuity, which helps keep the office market moving steadily,” Kawatra said.
He added that infrastructure investment is emerging as a quiet but powerful driver of office demand. Expanded metro networks, improved roads and better urban connectivity are opening up new micro-markets along transit corridors, while Tier-2 cities are increasingly being considered first-office destinations rather than fallback options.
As these locations evolve, companies are adopting a cautious expansion strategy, Kawatra said, preferring to scale in phases rather than commit to large, long-term leases upfront. “This cautious approach is widening the gap between intent and commitment,” he said, adding that flexible and managed offices are filling this space by allowing businesses to test markets and teams before locking in scale.
According to Kawatra, flexible workspaces enable growth that is “measured and reversible.” CFOs prefer operating expenditure over capital-heavy investments, founders prioritise speed, and HR teams seek offices that are functional from day one. This model, he said, is particularly attractive for global capability centres and startups navigating global uncertainty and currency volatility.
Hybrid work trends are further accelerating this shift, leading to more distributed office footprints — smaller offices across multiple locations instead of a single large headquarters.
Despite strong momentum, including over 30% year-on-year growth and more than ₹10,000 crore in overall sector revenue, Kawatra pointed out that the flex office industry still lacks formal regulatory recognition. “It is time for the government to acknowledge flexible workspaces as a distinct real estate asset class,” he said, arguing that a clear definition could unlock financial efficiencies, improve ease of doing business, and support startups, MSMEs and large enterprises alike.
“Commercial real estate remains resilient, but flexible offices are growing faster because they align with how companies actually grow today — testing, scaling and stabilising without locking themselves into irreversible decisions,” Kawatra said. “Budget 2026 does not push companies to grow faster; it pushes them to grow smarter.”
