Flex office inventory in tier II, III cities to grow 25% by 2024-end, says report

Riding on factors such as changing workplace dynamics, a flourishing startup ecosystem, conducive government policies and infrastructural advancements, non-metro cities are garnering increasing attention from flexible office solution providers in India. The total flex stock in tier II and III cities in the country is projected to grow 25% by the end of calendar year 2024, according to a MyBranch-Qdesq report released on June 10.

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Furthermore, by March 2030, this model of commercial realty is likely to account for a notable 33% share in the anticipated 1.4 billion square feet of total Grade A and B office stock in the country, it showed.

“Tier II and III cities in India are rapidly emerging as vibrant hubs for enterprise growth, fueled by increasing demand and a burgeoning supply,” said Qdesq Founder and Chief Executive Paras Arora.

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While cities like Pune, Ahmedabad, Jaipur, and Indore are set to lead supply creation in 2024, other non-metro geographies gaining increasing traction include Ludhiana, Vellore, Siliguri, Nashik and Jalandhar.

Upward trajectory

According to the report, demand for flexible office spaces in tier II and III cities grew 12% annually in 2024. Meanwhile, supply grew four-fold between 2020-24, owing to increasing need for “cost-effective and adaptable office solutions”.

The primary sectors driving this demand comprise financial services, IT, insurance, e-commerce and HR.

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The surging demand has also resulted in a corresponding price increase. Prices per desk and per square feet rose anywhere between 5-8% in the third quarter of 2023, on a sequential basis, it noted.

Key drivers

The report argues that non-metro cities offer a conducive environment for businesses, including access to talent, lower operational costs and growing markets. In 2023, MyBranch received over 125 office space inquiries and generated approximately 70 leads from tier II and tier III cities.

Moreover, as per a survey by recruitment marketplace MyRCloud, non-metro cities created 17 lakh new white-collar jobs in 2023, surpassing the 15 lakh jobs generated in their metro counterparts.

“Businesses, especially startups and SMEs, prefer flexible workspaces for their affordability, scalability and convenience,” the report highlighted, adding that the trend is also being adopted by large enterprises, which are shifting towards a hybrid work model.