India's 17 small towns house 575 co-working centres to cater managed office space demand: Report

New Delhi, Co-working operators are expanding their business in tier II cities to meet demand of managed office spaces from corporates, as more than 575 centres, comprising nearly 9 million sq ft area, have been set up across 17 small towns, according to Vestian.

US-based real estate consultant Vestian has come out with a report 'Flex Spaces Reshaping Tier II Office Markets', which suggests that India's 17 major tier II cities house more than 575 co-working or flexible workspace centres, representing nearly 29 per cent of the total such facilities across India.

In terms of area, these 17 towns have over 8.8 million sq ft of flexible workspace stock, accounting for over 9 per cent of the pan-India flex stock. The average size of the co-working centre is 64 per cent smaller than that of Tier-1 cities.


Co-working operators generally take on lease office space from real estate developers and property owners to set up their centres and then sub-lease workspaces to corporates of all sizes. These operators generally charge per desk.

These 17 cities are --Ahmedabad, Kochi, Indore, Jaipur, Coimbatore, Lucknow, Mangaluru, Chandigarh, Bhubaneswar, Dehradun, Vadodara, Surat, Trivandrum, Vizag, Guwahati, Goa and Kozhikode.

"The rise of tier-II cities is a defining shift in India's expansion strategy. As infrastructure improves and flex ecosystems mature, the decentralization of GCCs (global capability centres) will become a cornerstone of the Viksit Bharat 2047 vision," said Shrinivas Rao, CEO of Vestian.

Vestian report noted that the flexible workspace segment in Tier-II cities has evolved. Operators are offering various formats such as dedicated desks, private offices, virtual offices, and enterprise-grade managed office spaces.

Commenting on this trend, listed entity Smartworks founder and MD Neetish sarda said, "While Tier I cities continue to account for the majority of leasing activity, we're also seeing Tier II markets gain prominence, driven by cost advantages, improving infrastructure and stronger connectivity."

Smartworks is present in Coimbatore, Jaipur, Kochi, Ahmedabad and Indore, he said, adding that the company continues to evaluate new market opportunities in sync with enterprise growth strategies.

Sanjay Chatrath, Co-founder & Managing Partner of Incuspaze, said, "India's flex workspace market is entering its next phase of growth, with strong momentum building beyond metros into Tier II and Tier III cities. As enterprises and GCCs look to tap into diverse talent pools and optimise costs, these emerging markets are becoming strategic expansion hubs rather than just satellite locations."

Incuspaze centres in tier II cities command an occupancy level of 90 per cent, he added.

"In 2026 we are expanding our presence in high-potential markets such as Ahmedabad, Pune, Lucknow and Jaipur, where companies are looking to access talent while staying asset-light and agile with premium office facilities," Chatrath said.

Manas Mehrotra, Founder of Bengaluru-based 315Work Avenue, said flexible workspace providers are poised to capitalise growing demand in tier-II and tier-III cities.

He noted that organisations are looking to optimise costs, be closer to employees, and retain talent with flexible work options.

"Also driven by factors such as reverse migration, cost of living, and infrastructural push by governments, Tier II markets are poised to witness a significant upswing in workplaces," Mehrotra said.

SpazeOne co-founder Sijo Jose said this trend would accelerate, driven by expanding talent pools, better infrastructure and rising enterprise interest beyond metros.

BHIVE Workspace founder Shesh Rao Paplikar said the company has been noticing a strong interest of enterprises in Tier-II markets.

"In my experience, as companies prioritize talent retention and cost optimisation, these emerging markets will be pivotal for the next phase of growth for flexible workspaces in India," he added.

Hanto Workspace founder Aashit Verma said the growth of flex workspaces in Tier 2 cities is a clear sign of how workplace demand in India is evolving.

"With lower real estate costs, better infrastructure, and access to a strong talent base, these markets are becoming increasingly attractive not just for startups, but also for large enterprises and GCCs," he said.

For operators, Verma said the focus has to be on building sustainable business models, maintaining strong occupancy, and delivering consistent quality as they expand into these emerging markets.

The Vestian report said that flex spaces in Tier-II cities deliver cost arbitrage of up to 50 per cent compared to the metropolitan cities.

"Driven primarily by the IT-ITeS sector, followed by consulting services, BFSI, and Engineering & Manufacturing sectors, more than 200 companies have already established over 300 GCC bases across major Tier-II cities," the report said.