Torbit Property Markets Insights - Tier-2 Cities - Emerging Frontiers Of Flex Spaces

Flexible workspace growth in India in the past decade was marked by more centres in Bengaluru, more seats in Gurugram, denser networks across Mumbai and Hyderabad. The metros absorbed nearly all the capital, all the experimentation, all the growth. Today, Bengaluru alone accounts for 31% of India's Flex office stock, with Hyderabad, Pune, and Mumbai each holding 12%, and the NCR contributing 26%.

Now we are seeing a shift in this concentration. Between 2023 and 2024, Flex operators opened more locations in cities like Indore, Jaipur, Kochi, Lucknow, and Coimbatore than at any point in the industry's history. As India's Flex market approaches 100 million square feet, this expansion into Tier-2 cities has moved from experiment to growth strategy.

In 2020, at the onset of the Covid pandemic when remote work became the norm, professionals returned to their hometowns while most organizations assumed it would be a short-term adjustment. What followed, however, challenged long-held assumptions about work and geography. Productivity remained stable—even improved in some cases—and a large segment of the workforce chose not to move back. This marked a deeper transformation in how and where skilled professionals chose to build their lives: away from exhausting commutes, in homes with more space and closer to their families. For employers, it opened access to experienced talent in locations that had previously been outside their recruitment reach—individuals who preferred to stay rooted where they were, yet continued to perform effectively from anywhere.

A decade back, cheaper rent in Tier-2 cities came with trade-offs: unreliable internet, limited vendor ecosystems, and offices that looked more like regional branches than professional workspaces. Smart City investments, new industrial corridors, EV hubs, and IT park developments have closed much of that gap. Government-led infrastructure policies are catalysing commercial real estate readiness in ways that didn't exist five years ago.

The amplified advantage of flex spaces is quite evident. Instead of spending months and crores on traditional fit-outs, corporates can move into plug-and-play Grade-A managed spaces in weeks. They can start with 10 seats and scale to 50 without renegotiating leases or redesigning layouts. For companies exploring lower-capex Flex solutions, the combination of cost optimisation and operational agility is compelling.

With the hybrid workforce models getting matured, the expectations of employees have also evolved. They're no longer requesting two days at home per week; they're asking to work from Coimbatore full-time. The question for enterprises is whether their infrastructure can support distributed hubs that offer employee convenience without sacrificing collaboration. The answer increasingly lies in Tier-2 cities. Employees get proximity and a better commute experience. Companies get professional office environments without forcing relocation. The model works particularly well for functions that don't require constant in-person interaction: finance teams, customer support, backend operations, and even specialised engineering pods.

Today, several Global Capability Centres are actively evaluating Tier-2 cities for exactly this purpose. They're setting up specialised teams, business continuity nodes, and backend ops in locations that offer talent access and operational resilience. With 120 new GCC centres and 40,000 jobs expected by 2026, the expansion pressure is real. State-wise GCC policies are accelerating this—many states now offer targeted incentives that make the hub-and-spoke model not just feasible, but financially attractive. BFSI firms are following the same playbook, exploring Tier-2 expansion as a way to balance growth with cost discipline. The sector has doubled its Flex adoption from 4.5% in 2023 to 10% in 2025, signalling that managed offices now address compliance and security requirements that once made Flex a non-starter.

Looking at the current scenario, large Flex operators are already piloting centres across Tier-2 cities. We expected corporate satellite teams, but what we're seeing is broader uptake across segments. Average corporate deal sizes have surged from 25 seats in 2023 to 53 in 2025, a 45.6% compound annual growth rate that reflects how seriously enterprises are taking Flex. D2C, fintech, edtech, and health-tech startups scaling beyond metros are using flexible workspaces for rapid deployment and market proximity. E-commerce sellers, SMEs, consulting firms, and boutique tech agencies that used to work informally are adopting Flex as they formalise operations. Local entrepreneurial ecosystems are maturing faster than anticipated.

In Tier -2 cities, the demand profile differs from metros. Lease terms tend to be shorter, team sizes are smaller, and there's greater price sensitivity to premium amenities. But what stands out is the aspiration for Grade-A managed spaces. In Tier-2 markets, corporates and startups expect metro-grade design, service, and reliability. They are choosing move-in-ready managed offices over the cost and complexity of traditional leases — and operators are adapting to serve this rising bar. Operators are adapting their formats accordingly. Coworking cafés, mall-workspace conversions, and mixed-use models are emerging to suit Tier-2 work culture and footfall patterns.

Going forward, the next million square feet of Flex workspace is increasingly coming from cities that didn’t have a market five years ago. For enterprises, this opens up new workforce strategies. You can build operational resilience by spreading teams across geographies. You can access talent that won’t relocate but will thrive in professional office environments close to home. You can test new markets and strengthen regional presence without large overheads or long leases.

Today, corporates account for roughly 35% of Flex occupancy by seats. By value, enterprise clients already contribute 54.1% of India’s Flex office market size (2024). This share is projected to stabilise at around 50% of total demand in the next 2–3 years — underscoring that Tier-2 expansion isn’t an experiment, it’s the next phase of enterprise growth. Tier-2 cities offer true expansion headrooms — markets where Flex Offices are in their early adoption phase, demand is rapidly maturing, and a growing skilled workforce has already made these cities home.

Powered by Torbit Realty.