Rise of Coworking Spaces in Tier-2 and Tier-3 Cities of India

Coworking Spaces in Tier-2 and Tier-3 Cities

People are no longer necessarily shifting to the big cities to pursue their dreams and ambitions; in fact, there’s been a rise in a new trend where people are actually moving back to their hometowns after spending a few years in the city.

But why the change in trajectory, you might wonder? Well, the answer is easy. This can be attributed to the rise of coworking spaces in small cities, especially the Tier-2 cities in India. This has not only opened up amazing job opportunities but has also resulted in Tier-2 and Tier-3 cities in India emerging as business hubs.

These upcoming coworking trends have revolutionized traditional office spaces in small cities and opened gates for the evolution of the work environment.

Nonetheless, there’s one thing that can be said with complete certainty: people would no longer have to leave their families for better work or life opportunities because, with the technological advancements, the small cities are steadily catching up to their metro counterparts in terms of quality of life and professional opportunities.

Coworking Spaces in Tier 2 and Tier 3 Cities

The introduction of coworking spaces in Tier 2 and Tier 3 was highly driven by the number of local startups and entrepreneurs in these non-metro areas. With the rise of the coworking market in India, coworking growth in Tier-2 cities like Jaipur, Indore, Ahmedabad, and Lucknow also shot up. There has been a 45% increase in the demand for enterprise-managed office spaces, the majority of which came from Tier 2 and Tier 3 cities.

Hence, where initially, individuals had to relocate to Tier 1 or metro cities for better growth and job opportunities, now, with the advancement of technology and office space infrastructure, they are provided with all the amenities required for smooth operations and functioning, all from the comfort of their hometown.

The flexible workspaces in these non-metro regions provide individuals with the opportunity to advance in their careers while staying in their small cities.

Moving further, let’s explore the reasons behind the business boom for startups, multinational firms, and young employees at the threshold of their new careers.

Also Read: Coworking Help With Networking

For Startups

Cautiously high rents and operational costs in the metro cities have proved to raise numerous hurdles for someone just starting off their business. In comparison to this, the initial overall costs of startups in Tier 2 and Tier 3 cities are comparatively lower, with skilled professionals being more affordable and local authorities being a lot more forthcoming and friendly.

Also, the coworking market in India is expanding rapidly, and the new availability of flexible workspaces in small cities makes it even more convenient for startups to function without any big initial investments.

And with the government putting more weight on supporting innovation and funding incubators, programs like Startup Chhattisgarh and Kerala Startup Mission have made the momentum go for entrepreneurs in the smaller cities.

And since the launch of the Startup India initiative in 2016, the Department for Promotion of Industry and Internal Trade (DPIIT) has recognized 92,683 entities as startups as of February 28, 2023. And as the reports suggest, as of June 30, 2022, over 38,250 of the recognized startups came from Tier 2 and Tier 3 cities.

Also Read: IT Infrastructure for Coworking Spaces

For Multinational Firms

In the past years, Tier 2 cities like Patna, Jaipur, Surat, and Indore have recorded tremendous growth in their economic growth rate of over 40%, putting them under the spotlight for the larger corporations. Setting up operations in these cities brings financial benefits on multiple levels.

Larger shared office spaces, coworking spaces, and other workspaces are readily available at lower costs, which allows these corporations to operate on even bigger scales.

Yet to be discovered, the tier-2 and tier-3 cities in India offer a vast talent pool of untapped potential. With the correct guidance and training, corporations can enjoy a large, highly skilled workforce at a fraction of the cost compared to metropolitan cities.

For Young Employees

Millennials today look for job opportunities close to their personal residences, while others believe that their skills are more valued in the smaller cities, which are not yet saturated.

And it is not just this; the cost of living in Tier-2 cities in India or Tier-3 cities is much lower than in a metro city. Those who decide to shift back to their hometowns tend to save on rent and other utilities, which is an enormous cost cutoff for someone just starting their career. And with the availability of coworking spaces in Tier 2 and Tier 3 cities, one doesn’t have to worry about having access to professional work environments and basic office amenities.

Also, with the rise in e-commerce, delivery services in the Tier-2 and Tier-3 cities are much more active, meaning one can enjoy a high standard of living even while living in the small cities.

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Potential Market Growth in India

With the Indian coworking office space market projected to register a compound annual growth rate (CAGR) of greater than 7% during the period 2023–2028, the rise of coworking spaces in Tier 2 and Tier 3 cities is bound to bring along its own opportunities and challenges.

The growing number of employment opportunities in Tier 2 and Tier 3 cities will present major growth in the coworking market in India in the coming years. The growth, being steered by freelancers as well as large corporations seeking flexible office solutions to accommodate their rising number of employees.

Though one cannot overlook the future spike in the Indian coworking industry in the coming years, and as coworking space development continues to progress, it is also necessary to understand that amidst these growth opportunities, flexible workspaces across cities will face various challenges, ranging from being able to provide the ideal workspaces that accommodate the needs of all their members to adjusting to the culture of the respective cities.

Also Read: Coworking Spaces Are Becoming Popular Among Large Corporations

Wrapping Up

The rising numbers of coworking spaces in Tier 2 cities and Tier 3 of the country have allowed entrepreneurs and startups to explore more affordable and flexible workspace options.

While the market size of coworking spaces in India is huge, this sector is expected to grow even more in the coming years.

Nonetheless, these growth opportunities will also bring along certain challenges like limited resources, inadequate access to funds, and poor infrastructure, which would pose hurdles for the coworking space development in these non-metro areas.

Therefore, it becomes all the more necessary to create a nurturing environment that can facilitate the growth of coworking spaces in Tier 2 and Tier 3 cities.

With the correct support and resources, coworking spaces could become the most preferred option for anyone looking for affordable and flexible office space solutions.