As companies go hub-and-spoke, flex office boom spreads to tier-II cities
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Demand for shared office space is growing in tier-II cities as companies increasingly adopt a hub-and-spoke model by setting up satellite offices away from metros to tap into regional talent, cut cost and build a distributed workforce.Flexible office space providers such as WeWork, Smartworks, Awfis, 315 Work Avenue and BHIVE are aggressively scaling up their presence in cities like Jaipur, Kochi, Pune, Coimbatore, Indore and Vadodara to cater to this demand, which is growing faster than supply.According to experts, while metros continue to grow rapidly, the next wave of co-working expansion will be led by tier-II cities, fuelled by increasing startup activity there and demand for office space with 50-500 seats.'Additionally, the emergence of global capability centres in these cities is set to attract real estate investments , making them key hubs for future business growth and significantly benefiting the flexible office sector,' said 315Work Avenue founder Manas Mehrotra.Growing reverse migration — people moving back to villages and towns from cities — improved digital infrastructure and incentives offered by states are fuelling increased activity in the flex-space sector.Governments in Gujarat, Kerala and Maharashtra have offered tax breaks, plug-and-play office zones and startup ecosystem support, making these states even more attractive to co-working operators and occupiers.Awfis Workspace solution, one of the country's largest flexible workspace providers, is doubling its presence in small cities and towns.'Tier-II flex-space stock is expanding fast, projected to contribute 35–40% of the total market by 2028. Demand spans IT, BFSI, ecommerce and manufacturing,' said Awfis Space Solutions chairman Amit Ramani. 'At Awfis, 39% of over 3,000 clients operate in multiple centres, highlighting Tier-II cities' strategic value.'According to Colliers' India Flexible Workspace Outlook 2025, flexible workspaces now account for 15% of office leasing in tier-II cities, up from 9% a year earlier.Industry experts said companies are retaining headquarters in metros while building agile regional nodes in smaller cities — optimising real estate costs and improving employee accessibility. Some have also rationalised real estate costs by consolidating and selling office assets in the country.The flexible workspace market in India's Tier-II cities has grown rapidly from 2021 to 2025, with a 23% year-on-year leasing surge in the January-March quarter of 2025, according to real estate consultancy CBRE.Pune, Kochi and Ahmedabad account for much of the demand growth, confirming their rise as strategic spoke cities for enterprise expansion.'Leading flexible space operators are expected to increase focus on refining their offerings by incorporating more amenities and technology, creating optimised hybrid work environments that enhance workplace experiences and expand value-added services for tenants,' said Anshuman Magazine, chairman and CEO – India, Southeast Asia, Middle East & Africa at CBRE.Rapid development of infrastructure and connectivity is a major driver of the rise of co-working spaces in tier-II cities. As companies seek cost optimisation, proximity to talent, and flexibility, demand for hybrid workspaces is rising. Lower cost of living and government-led infrastructure initiatives are further boosting demand in these markets.Tier-II cities will eventually contribute 20% to the total flexible space absorption, said BHIVE Workspace CEO Shesh Paplikar.
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