A report by Vestian, a US-based real estate consultant, finds that 17 towns in India host 575 co-working centres covering over eight point eight mn sq ft of flexible workspace. This concentration represents nearly 29 per cent of all such facilities across India and about nine per cent of pan-India flexible workspace stock. The average centre in these towns is 64 per cent smaller than centres in Tier I cities.

Vestian's study notes that co-working operators typically lease office space from developers and property owners and sub-lease workspaces to corporates, generally charging per desk. Operators are offering formats including dedicated desks, private offices, virtual offices and enterprise-grade managed office spaces to meet a range of corporate needs. The expansion reflects rising demand for managed office space outside metropolitan areas.

Industry executives cited by the report said that cost advantages, improving infrastructure and stronger connectivity are driving the shift to Tier II markets. Several established providers have expanded into locations such as Ahmedabad, Coimbatore, Jaipur, Kochi and Indore and continue to evaluate new opportunities in line with enterprise growth strategies. One provider reported occupancy levels of 90 per cent in its Tier II centres, indicating strong market acceptance. Reverse migration trends and lower cost of living were also identified as contributing factors.

Vestian observed that flex spaces in Tier II cities can deliver cost arbitrage of up to 50 per cent compared to metropolitan cities, with demand led by IT-ITeS followed by consulting, BFSI and engineering and manufacturing sectors. The report noted that more than 200 companies have established over 300 global capability centres across major Tier II cities, underlining the strategic appeal of these markets. Analysts expect Tier II towns to become important expansion hubs as flex ecosystems mature.