As the global property sector is evolving, so is the world of office premises. More and more companies, small businesses and corporations alike, are moving away from stand-alone offices with long-term leases in favour of shared and more flexible workspaces.
Over the past few years, the global co-working industry has grown from strength to strength, with the one after the other shared business hub opening its doors. Data released during last year’s Global Co-working Unconference Conference (GCUC) in Denver, one of the largest co-working events if its kind, showed the world currently accounts for 35 000 shared office centres, accommodating many thousands of companies.
The future looks bright, too: information presented at the GCUC suggests that two-thirds of all shared workspace centres worldwide saw their tenant base increase last year, with a third of them expanding in terms of surface area.
Another interesting fact is the growing appetite for shared office space amongst larger companies, even multinationals. Last year, the global corporate demand for these types of business premises solutions increased by 21%.
In South Africa, the situation isn’t much different. More and more corporates, local and international ventures alike, are acknowledging the practical and financial advantages of operating from shared business premises.
“Like start-ups and smaller companies, corporates are very aware of the volatility of the markets and the overall economy. They, therefore, are no longer willing to invest in huge fit-out costs for their office space,” says David Seinker, CEO of The Business Exchange, a company which offers co-working and shared office spaces across Gauteng and Mauritius. Clients include a range of innovative start-ups and corporates such as House and Leisure, Standard Bank, Doha Bank and global TravelTech company Expedia.
“Large businesses, like any other business, are looking at ways to cut costs and lessen the pressure on their balance sheets. The easiest way to do that is by changing where and how you operate,” he says.
According to Seinker, sharing business premises with others is more affordable than renting your own office and having to take care of and pay for all amenities on your own, such as board rooms, high-speed internet, cleaning services, receptionists, meeting rooms, and high-tech teleconferencing solutions. “Moving to a shared office space can reduce overall lease investment costs by up to 70%”
Linked to this, there is a growing demand for flexibility in terms of leases. “The number of companies, small and large, that are prepared to sign leases of five to 10 years, is declining fast,” says Seinker.
“Nobody wants to be tied down for that long as nobody knows what the economy will do, and how these changes will impact their operations. Few businesses, corporates included, will sign leases of five years or longer. Smaller companies can lease space for a period of three-months and up, while corporate clients often sign for longer as they see the value in our offering. That being said, it’s still not as big of a commitment as locking yourself in for a decade. This is what the market wants and needs. Besides that, we also help clients to up or downsize if their situations change.”
Over and above cost-efficiency and flexibility, the ease of moving in and getting started is a major draw card. “Just before Expedia moved in in 2019, we retrofitted their space to meet all their needs and requirements. This means they could hit the ground running straight after occupying the space,” Seinker says. “We do this for other companies, too, to make moving offices as painless as possible.”
The overall people-centricity and the fact that shared business premises foster collaboration and innovation is another major driver of the corporate uptake. “Co-working spaces are so much more than just a place where you run your business from. Most of these set-ups are communities that promote collaboration.”
“It has to be noted that not all co-working spaces will be able to manage the intake of corporates,” Seinker explains. “Big corporations don’t want over-crowded, playful and noisy spaces, which many co-working offices have become.”
“They want a professional space and one that they are able to easily conduct meetings within” he concludes.