Managed Office Space

Rapid Growth in Managed Offices in Tier-2 Cities in India 

According to Harsh Binani, managed and flexible workspaces have become a preferable choice for today’s young, ambitious, and budding entrepreneurs, not only in Tier-1 but Tier-2 cities as well. Post-pandemic, workplace dynamics have transformed pretty quickly, and flex spaces have become a prominent contributor to the overall commercial real estate sector.

Harsh Binani also acknowledges the fact that “The flex space industry is witnessing a dream run in India as occupiers from different sectors and regions are now interested in hybrid and satellite office setups. The growing demand for managed spaces suggests that enterprises are trusting flex solutions for their changing needs which ultimately include factors such as cost-effectiveness, geographic expansion, faster scalability, and elevated office experience.” 

Earlier, cities like Bangalore, Delhi-NCR, Pune, Hyderabad, and Chennai used to dominate the share of flex and managed space leasing due to obvious reasons. Whereas, if we take a closer look into the trend, it shows that a large number of MNCs and domestic corporates are keener on Tier-2 expansion. Tier-2 cities have emerged as an attractive alternative due to their cost-effectiveness in terms of lower operational costs along with the availability of a talented pool of potential candidates. 

As we proceed further, let’s delve into the factors that justify the growing popularity of flex and managed space leasing among large and medium enterprises in Tier-2 cities.  

1. Human Resources

  • Availability of Skilled Workforce: The increased availability of educated, talented, and experienced working professionals attracts businesses to commence or expand their existing business model in Tier-2 cities.  The increased availability of educated, talented, and experienced working professionals attracts businesses to commence or expand their existing business model in Tier-2 cities.
  • Lower Attrition Rate Across Different Sectors: Many large corporates have already initiated their regional expansion in Tier-2 cities, which provides more employment opportunities to the people who belong to these specific locations. According to Ernst & Young Global Limited, the attrition rate in Tier-2 cities has been observed to be up to 10 percent less than in Tier-1 cities.

2. Cost Factors 

  • Economical Commercial Propositions: In recent times, authorities have done a remarkable job to uplift the entire business ecosystem and facilities of Tier-2 cities. Even after significant developments, they remain a cost-efficient alternative for businesses which captivate large and established businesses. 
  • Lower Cost of Living: The affordable cost of living, growing healthcare facilities, and availability of economical educational entities enhance the quality of life in Tier-2 cities. 

3. Robust Infrastructure

  • Increased Availability of Commercial Spaces: Tier-2 cities have witnessed high growth in managed and flexible workspaces. For instance, Jaipur, Ahmedabad, Kochi, Indore, and Lucknow have more than three flex operators. The availability of these flexible and managed workspaces is attracting entrepreneurs to consider tier-2 cities for office leasing.   
  • Enhanced Quality of Connectivity: According to the latest mobility index report, two of the top five cities in mobility infrastructure belong to the Tier-2 regions, namely, Jaipur and Bhubaneshwar. Many schemes have been implemented by the authorities to further flourish connectivity for occupiers.  

Apart from all this, the promotion of SEZs, potential in the market, lower pollution levels, and improved standard of living attract businesses to expand in tier-2 cities. Harsh Binani also believes that the overall growth in demand for managed offices in Tier-2 cities is indicative of the changing dynamics in how businesses approach their workspace requirements.

As these cities continue to grow and develop, the trend of flexible and managed office solutions is expected to persist, contributing to the overall transformation of the commercial real estate landscape.

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