The landscape of office real estate is witnessing a significant shift as Tier-II cities across India emerge as vibrant centres for flexible workspaces. According to a recent report by CBRE titled “The Office Sector’s Ascent: Tier-II Cities on the Horizon,” Ahmedabad leads with the highest flex stock, boasting over 0.5 million sq. ft. as of September 2023. This trend underscores the growing recognition among workspace operators of the potential these markets hold, not just for startups but also for established firms seeking expansion and cost-effective solutions.

Flexible office operators are increasingly establishing their presence across these cities, with nearly 26 significant players recorded in 10 key Tier-II cities, including Chandigarh, Jaipur, and Coimbatore. The report highlights that cities such as Chandigarh, Jaipur, and Kochi also host substantial flex stock, ranging between 0.3 to 0.5 million sq. ft. At the same time, locales like Lucknow and Visakhapatnam feature slightly more flexible office spaces of a minor scale.

“The sectoral drivers of office space demand in Tier-II cities include IT, technology, flexible space operators, and e-commerce startups, among others,” the report notes, indicating a robust future for office space absorption in these regions. Indeed, the overall office uptake in these cities reached approximately 1.6 million sq. ft. from January to September 2023, with Ahmedabad, Jaipur, and Thiruvananthapuram leading the pack.

The total office stock in these ten cities stands at around 68 million sq. ft., with Ahmedabad, Kochi, and Thiruvananthapuram each holding more than 7.5 million sq. ft. This extensive development is supported by a blend of new entries and expansions by leading flex operators like Awfis and Incuspaze and newer players such as IWG and Smartworks, marking a shift towards more modern office parks even in smaller cities.

Anshuman Magazine, Chairman and CEO of CBRE for India, Southeast Asia, Middle East & Africa, emphasised the broader economic context: “India’s tier-I cities have traditionally been the main drivers of economic growth as prime employment hubs. However, India’s non-metros, referred to as tier-II and tier-III cities, are now developing as hubs of trade and business, bolstered by the growth of micro, small and medium-sized enterprises (MSMEs) which provide a vital boost to local economies.“

This evolution in the office sector landscape points to a promising future where Tier-II cities serve as cost-effective alternatives and as dynamic hubs capable of supporting the diverse needs of modern businesses. The shift towards these cities is fueled by a combination of factors, including a growing talent pool, competitive real estate costs, and enhanced infrastructure, setting the stage for these regions to attract more businesses looking for flexible and innovative workspace solutions.