Commercial real estate booming in non-metros

Amit Ramani of Awfis Space Solutions discusses the transformative growth trajectory of India's commercial real estate sector.

But while these numbers do tell a story, they don’t tell the whole story. They don’t capture the profound metamorphosis being driven across all levels, nor the role that commercial real estate has been playing in the broader Indian growth story. For, at the heart of this transformation, there is a fundamental recalibration of the business landscape and how it interacts with the economic landscape beyond key urban centres.

For decades, India’s commercial real estate story was largely confined to its metropolitan hubs such as Mumbai, Delhi-NCR, Bengaluru, and Hyderabad. These cities dominated the landscape, accounting for a significant chunk of all commercial developments. That narrative, however, is beginning to shift; cities such as Jaipur, Indore, Coimbatore, Nagpur, Kochi, Chandigarh, and Lucknow are emerging as the frontiers of the next phase of commercial real estate growth in recent years. It is little wonder, then, that nearly half (44%) of the 3,294 acres of new land acquired by real estate developers in 2024 were concentrated in Tier-2 and Tier-3 cities.

This geographic diversification isn’t merely a spillover effect. Lower land acquisition costs, ever-improving infrastructure, and a sizeable talent pool at competitive wages have created a compelling business case for expansion into these emerging markets, for developers and corporations alike. The expansion of high-speed internet connectivity, including the ambitious BharatNet project targeting rural broadband access and the 5G rollout in Tier-2 areas, has also diminished the digital divide between India’s metros and its smaller cities.

State governments across India have also introduced several targeted policies to attract commercial developments, offering tax incentives, simplified approval processes, and dedicated industrial corridors. As a result, IT-focused commercial developments and tech parks are now flourishing in Tier-2 and Tier-3 cities across the country. These developments are not mere replicas of their metropolitan counterparts but are designed with a focus on sustainability, wellness, and integration with local communities.

The commercial real estate evolution extends well beyond office spaces. Modern retail infrastructure is reshaping consumer experiences across smaller urban centres. Unlike the cookie-cutter malls of yesteryears, the new retail developments in Tier-2 and Tier-3 cities are being tailored to reflect regional preferences and cultural nuances.

These spaces are increasingly becoming experiential hubs rather than mere transactional venues, with malls containing designated areas for local artisans and handicrafts, as well as cultural performances.

Perhaps the most transformative impact of commercial real estate on non-metro India is being witnessed in the logistics sector. The implementation of GST, coupled with the development of economic corridors and expressways, has sparked unprecedented demand for warehousing and logistics parks in Tier-2 and Tier-3 cities. According to a recent report by JLL India, these markets account for around 100 million square feet — or 18.7% — of India’s total warehousing capacity.