India’s Tier-II cities are experiencing a significant upswing in office space demand, signalling a shift from the traditional dominance of metropolitan markets. With affordable rents, an expanding talent pool, and evolving work models, cities like Coimbatore, Mysuru, and Bhubaneswar are becoming hotbeds for commercial real estate growth.

“More than 10 lakh square feet of office space has been leased in Coimbatore alone over the past few years,” highlighting the scale of this transformation. Key deals include Bosch Global Software Technologies’ two leases totalling 3.25 lakh sq ft and State Street Corporate Services’ 2.1 lakh sq ft lease valued at ₹126.24 crores. Major firms like Infosys, Deloitte, Amazon, and Accenture also expand their footprint in these smaller markets.

A driving force behind this trend is the widespread adoption of hybrid work. Many companies now prefer a hub-and-spoke model, maintaining a central office in metros while setting up satellite offices in Tier-II cities. This decentralisation allows businesses to tap into regional talent while reducing operational expenses. According to industry data, the demand for coworking and flexible offices in these cities jumped by 12% in 2024 alone.

Startups, especially in tech, are helping fuel this momentum. Nearly half of India’s new startups originate in non-metro cities, pushing demand for Grade A and flexible office spaces. “Lower rental and operational costs—30% to 50% lower than metros—make Tier-II cities highly attractive,” the report noted. In Coimbatore’s central business district, office rents range from ₹50–70 per sq ft, far below rates in cities like Bangalore or Mumbai.

The pandemic also played a pivotal role in reshaping office location strategies. Reverse migration, where professionals returned to their hometowns seeking safety and affordability, led companies to follow suit. Hiring in cities such as Kochi, Jaipur, and Coimbatore surged by 11% in 2024, triggering a corresponding rise in office space requirements.

Infrastructure hubs are helping sustain this expansion. Projects like MIHAN in Nagpur, Mahindra World City in Jaipur, and Technopark in Trivandrum have successfully attracted IT firms. Upcoming developments like Fintech Valley in Vizag and TIDEL Park in Coimbatore also draw interest from corporates and investors.

However, challenges remain. Limited Grade A office stock availability, patchy urban infrastructure, and inconsistent internet speeds hinder growth in some areas. “The National Broadband Mission 2.0 aims to address connectivity gaps, a key factor for IT-driven growth,” experts said. They also stressed the importance of reliable project execution and quality standards from developers.

With rising demand, improving infrastructure, and a shift in corporate priorities, Tier-II cities are well on their way to becoming the new growth engines of India’s office space market. As businesses seek agility and affordability, the spotlight turns away from metros and toward the country’s next wave of commercial hubs.