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Coworking in Tier‑2 Cities: Hype or the Next Big Goldmine?

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In India, coworking is no longer just a metro-city affair. Tier‑2 cities like Coimbatore, Mysuru, Jaipur, Indore, and Bhubaneswar are quietly becoming the new playgrounds for flexible workspaces. But is this just another trend—or a major opportunity waiting to be tapped?

Let’s break it down.

1. Rising Demand Beyond Metros

Post-pandemic work models like hybrid and remote have pushed companies to rethink how and where they work. Many are adopting a "hub-and-spoke" strategy—keeping a head office in metro cities while expanding into Tier‑2 markets for local access, cost savings, and talent.

In 2024 alone, office leasing in Tier‑2 cities grew by over 12%, and major corporations have started setting up operations in places like Coimbatore and Lucknow. These aren’t just satellite offices—they're becoming serious business hubs.

2. Market Projections: A Surge Ahead

India’s coworking market is currently valued around $1.9 billion, and it’s expected to cross $2.7 billion in the next few years. A major chunk of this growth is coming from non-metro cities. What was once seen as a backup option is now emerging as the preferred choice for businesses looking to scale smartly.

Even enterprise-level companies are showing interest. Demand for managed spaces from larger companies in Tier‑2 cities has surged by 45%.

3. Why Tier‑2 Cities Are Gaining Ground

Lower Costs, Higher Margins

Office rents in Tier‑2 cities are often 30–50% cheaper than in metros. That means better margins for coworking operators and more savings for tenants.

Local Talent and Reverse Migration

With more people returning to their hometowns, there’s a growing local talent pool. Cities like Jaipur, Kochi, and Mysuru are seeing tech professionals and creatives set up shop locally.

Startup Ecosystems Are Thriving

Nearly half of India’s new startups are launching outside metros. These founders don’t want long-term leases—they want plug-and-play flexibility.

Infrastructure Is Catching Up

Better roads, stable internet, and government-driven smart city programs are making Tier‑2 cities more viable for businesses that once stayed metro-centric.

4. Big Players Are Betting Big

Major coworking brands are doubling down on Tier‑2 expansion.

  • Awfis has significantly expanded into smaller cities in the last year alone.
  • WeWork and IWG (Regus) are increasing their regional footprints.
  • Even local coworking startups are popping up with innovative, hyperlocal models that fit the vibe and budget of their home cities.

This isn’t trial-and-error. It’s full-on execution mode.

5. What’s Driving the Shift?

Driver

Impact

Hybrid Work

Creates demand for regional satellite offices

Tech Expansion

Big IT firms are moving into Tier‑2 cities

Affordability

Great for startups and freelancers

Lifestyle

Lower cost of living and better work-life balance attract talent

6. Challenges That Still Exist

It’s not all smooth sailing yet.

  • Awareness Gap: Many traditional businesses still prefer long-term leases over shared spaces.
  • Infrastructure Varies: Not all Tier‑2 cities have reliable power or high-speed internet.
  • Slow Breakeven: Lower rental yields in some cities mean longer time to profitability for operators.

But most of these are transitional hurdles—not permanent roadblocks.

7. So, Is It Hype or the Next Big Thing?

All signs point to opportunity, not just buzz.

  • Leasing activity is steadily increasing in Tier‑2.
  • National coworking players are investing millions into new centers.
  • Local businesses and startups are embracing the shift.

It’s not a question of “if” anymore—it’s about how fast and how smart you enter these markets.

8. What This Means for You

For Coworking Operators

  • Tailor offerings for affordability and utility.
  • Create community-driven spaces that tap into the local vibe.
  • Educate traditional businesses on the value of flexibility.

For Startups & SMEs

  • Use coworking as a launchpad—save money and stay agile.
  • Attract top-tier talent without paying metro premiums.
  • Build in cities that have growing ecosystems but less competition.

For Investors

  • Tier‑2 coworking is a high-growth segment that’s just beginning to mature.
  • With the right operational partner, this can be a cash-positive long-term play.

9. Looking Ahead

By 2025–2027, expect coworking in Tier‑2 cities to go mainstream. Cities like Bhubaneswar, Coimbatore, Hubli, and Vadodara are already witnessing high demand.

More specialized offerings—like wellness-focused offices, creator-first spaces, and tech-enabled flexible centers—are likely to pop up.

And with startups going regional, GCCs exploring smaller cities, and remote work becoming the norm, Tier‑2 coworking isn’t the future.

It's now.

Coworking in Tier‑2 cities isn’t hype. It’s smart business. It’s about meeting today’s professionals where they are—closer to home, without compromise on quality or culture.

So, whether you're an entrepreneur looking to grow or a space operator planning your next expansion, don’t ignore Tier‑2 cities. They just might be your next big goldmine.