Vizag to Vijayawada: Flex office operators eye AP as a new frontier

Mint

15 hours ago

BENGALURU
:
The touristy coastal city of Visakhapatnam, and the industrial hub of Vijayawada in Andhra Pradesh have not been obvious destinations for flexible office operators. But that is changing.
With the Andhra Pradesh government rolling out a red-carpet welcome in the form of land and rental subsidies to promote co-working, leading flex operators are looking to set up operations in the state.
Companies such as Awfis Space Solutions Ltd, IndiQube Spaces Ltd, International Workplace Group (IWG) and Hanto Workspace have opened their first centre, or are planning to launch in these cities this year, as they look to tap the demand from global capability centres (GCC) and pharmaceutical and technology firms as occupiers.
Awfis, the first such operator to get publicly listed last year, plans to open its first centre in the state this year.
'The AP government has a friendly co-working policy, where it offers operating expense subsidy and help investing towards capex. They government will also help in bringing in demand and they are talking to several companies, including IT firms, to set up operations in the state," said Amit Ramani, chairman and managing director of Awfis.
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Ramani says demand is there from consulting and IT/ITeS firms, and some companies who had exited Andhra Pradesh due to various reasons are now making a comeback due to the government's proactive attitude.
'We believe the cities of Vijayawada and Vizag (Visakhapatnam) will lead the charge on the flexible workspace front in the southern state," he added.
Policy push and early movers
Andhra Pradesh is probably the only state that has unveiled a policy to promote co-working. Late last year, the state government offered rental holiday – essentially, assuring rent payments to co-working operators for the first six months if a property remains unoccupied– and subsidy on capital expenditure, among other incentives. Additionally, in its attempt to pursue real estate companies from other states, it has also offered land to set up residential and office projects.
Bengaluru-based IndiQube, which opened its first centre 'IndiQube Pushkar', a 35,000 sq ft managed office space taken up by UnitedHealth Group, a GCC, in Vijayawada last year, is eyeing Visakhapatnam next.
'Cities such as Visakhapatnam are looking to grow aggressively as business hubs. Even smaller cities such as Tirupati, which is cheaper, will see growth on this front," said IndiQube co-founder and chairman Rishi Das.
As more companies set up operations in the state, it will open up new job opportunities. More startups will also follow and look for places to work.
IWG is expanding into Vijayawada with three new centres set to open this year in response to rising demand for hybrid working and as a result, for flex workspaces.
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'This forms part of our broader strategy to meet the needs of professionals and businesses in fast-growing Tier II and III cities across India. Vijayawada is a dynamic emerging city, and a key part of our national expansion roadmap, alongside Vizag," said Harsh Lambah, country manager India, vice-president sales - South Asia, IWG. The three centres will offer a combined area of 25,100 sq ft and around 420 workstations.
Tier 2 growth momentum
As the commercial office market in India turned around after the pandemic, it saw strong demand pushing adoption for flex workspaces. Flex leasing jumped from 7.9 million sq. ft in 2022 to 15.8 million sq. ft in 2024, as per property advisory CBRE India.
Aashit Verma, founder of Hanto Workspace said it is in early discussions with the AP government to set up workspaces.
'The government has been proactive and supportive, offering practical incentives making easier and more cost-effective for companies like ours to expand. The state is removing roadblocks and building an ecosystem that mirrors the growth trajectory of Bengaluru but with fewer growing pains. The comprehensive incentives being offered reduce entry barriers," Verma added.
According to property consultants, Tier 2 cities will prompt the next level of expansion for flex operators.
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'Neighbouring cities such as Hyderabad already has a thriving managed office ecosystem. AP is trying to bring the workforce back into the state that will drive occupier demand for flex workspaces," said Joseph Thilak, national director- occupier strategy and solutions (Hyderabad & Chennai) at property advisory Knight Frank India.