India’s Tier II Markets Becoming Most Profitable Bet in Flex Workspaces

By Umesh Uttamchandani

New Delhi, January 20, 2026: India is projected to become the world’s third-largest economy by 2028, overtaking Germany within the next decade. As the nation’s economic footprint expands, its workplace geography will reconfigure fundamentally, pushing enterprises to look beyond traditional office markets.

Against this backdrop, 2025 may be remembered as the year India’s flex-space boom quietly shifted ground, from crowded metros to rising Tier-2 hubs. What were once considered as peripheral markets have fast become the epicentre of the country’s next flex-space growth cycle. This strategic shift reflects the next frontier for untapped talent pools, favourable economics, and evolving domestic and global enterprise demand.

The broader market dynamics reinforce this transition. According to Cushman & Wakefield’s latest report, India has established itself as one of the world’s most advanced and mature flexible office ecosystems, thereby placing itself in a league where flex space is seen as a core workplace strategy.

This is further reflected in the numbers too: the flexible workspace sector is projected to reach $11.39 billion by 2030. Meanwhile, enterprise adoption is accelerating sharply as 72 per cent of domestic firms plan to expand office portfolios over the next two years.

But what’s most interesting is ‘where’ this expansion is headed. With Tier 1 cities facing rising rents, saturated markets, and mounting congestion, the opportunity curve is tilting toward Tier II markets.

For operators, the most strategic question of the next decade is not “How do we capture more in Tier I?” but ‘How quickly can we scale in Tier II and intelligently build first-mover advantage?’ For tech workspace providers—those delivering turnkey, custom-built, full-stack Workspace-as-a-Service ((WaaS) solutions—the pivot is not only logical but strategically urgent too.

Decentralisation with Sophistication

The critical insight driving Tier II expansion is that enterprise occupiers don’t compromise on quality regardless of location. Mid-market firms, satellite Global Capability Centre (GCC) offices, and established corporates expanding beyond metros demand the same tech-enabled, professionally managed environments they occupy in Tier I cities. This creates a high-margin opportunity for operators who can deliver metropolitan-grade experiences at Tier II economics.

CBRE’s 2025 India Market Outlook reinforces this trajectory, noting that organizations are embracing hybrid work models and driving sustained demand for flexible workspaces. The outlook projects continued momentum in office leasing activity, with established hubs maintaining their importance while Tier II cities such as Ahmedabad, Vadodara, Jaipur, Indore, Coimbatore and Kochi gain traction.

Operational Leverage of Tier II Markets

Tier II flex demand has grown 4x in the last five years, and is now expected to deliver around 28 per cent growth this year. What makes these markets attractive is the operational economics too. Rents here are potentially 30–50 per cent lower than major metros, and fit-out costs are more competitive due to local vendor ecosystems and ease of compliance. Yet enterprise clients remain willing to pay seat rates comparable to metro locations as long as the delivered product matches Grade-A benchmarks.

Operators report that break-even timelines in Tier II are three to four months faster than in Tier I locations, purely because capital intensity is lower and contract tenures are more predictable (typically 12–24 months).

Viewed through a return-on-investment lens, Tier II cities allows flex workspace operators to achieve slightly higher rent-to-revenue ratio as compared to metros. This is the fundamental operational leverage that will drive India’s next flex-space growth cycle.

Future Belongs to Tier II Flex Markets

Tier II expansion represents a strategic imperative for workspace operators seeking sustainable growth and superior returns over the next few years. Tier I cities will remain headquarters, innovation hubs, and large-campus destinations. But the incremental growth — the marginal demand that drives industry expansion — will increasingly come from Tier II markets.

The fundamentals align across multiple dimensions: cost advantages, growing enterprise adoption of flexible solutions, structural workforce shifts creating permanent demand, and maturing business ecosystems.

For grade-A workspace providers capable of delivering custom office solutions with consistent service quality, Tier II markets offer the best combination of superior unit economics, expanding client demand, and early-mover positioning. Forward-thinking operators who execute this geographic expansion with precision are likely to define the upcoming chapter of India’s flexible workspace sector.

The author is Managing Director, DevX

DISCLAIMER: The views expressed in the above piece are personal and solely those of the writer. They do not necessarily reflect Realty & More’s views.