Huge growth expected
- Not just for tech start ups or freelancers
- Large companies like Microsoft, HSBC driving fast growing market for shared space
Co-working spaces, the trend that is shaking up the traditional workplace model the world over, is set to cause a dramatic change in how and where people work in South Africa.
Linda Trim Director of FutureSpace, a joint venture between Investec Property and workplace specialists Giant Leap that offers high end co-working space, said that in 2016, there were approximately 11 000 co-working locations around the world.
“But this figure is expected to more than double to 26 000 by 2020. By comparison, there are approximately 24 000 Starbucks locations worldwide. Taking a cue from the popular reference to the coffee giant’s location strategy, that means there may soon be a co-working space on every corner.”
Trim noted that co-working spaces were increasingly popular with strong demand for FutureSpace’s offices.
“We already have steady 80% occupancy rate only three months after launching.”
FutureSpace plans to open further offices around South Africa, a possibly overseas in 2018 such is the demand.
The biggest shift Trim expects to see in the coming years is that co-workspace will become a key component of many companies’ workplace and real estate strategies — for occupiers and building owners alike.
“Flexible workspace is not just for millennial freelancers or tech startups anymore. Large, multinational companies are increasingly taking on space at flexible workspace operators or integrating shared working spaces into their own environments,” she noted.
For example, Microsoft recently shifted 70% of their sales staff in New York City to flexible workspace. Large employers already make up the fastest growing market for shared workspace provider and many businesses’ preferences are moving toward short-term real estate contracts with flexible provisions.
Companies like IBM and Microsoft have begun to outsource the design, building and management of some of their workspaces to third parties.
Said Trim: “In the same way we now purchase many technologies as services rather than as software, the future of ‘space as a service’ looks bright.
“This model provides companies with a way to access space in an on-demand fashion, drawing on the knowledge of outside experts in a way that frees them to focus on their own core businesses.”
Building owners are also finding opportunities to revitalise underused spaces by transforming them into the type of shared work areas that are increasingly in demand.
Already, many occupiers won’t consider a building without available flexible space. To remain relevant, commercial office buildings will need to create spaces that attract people to connect and collaborate — both within the office and outside of it.
In South Africa, as in the rest of the world, companies will soon need to think more about accessing office space than owning or leasing it.
This paradigm shift will require an evaluation of “core” and “flexible” space needs.
Core space is the real estate a company must rent or own over the long term for the business to function. Flexible space is the real estate that can be deployed quickly without long-term commitment, adjusting in near “real time” based on needs.
“By categorising space needs this way, businesses can make better decisions about how to execute a real estate strategy that minimizes cost and maximizes opportunities.” Trim added.
One of the best examples of large companies adopting the flexible co-working workspace approach in Asia is HSBC’s recent contract for 400 desks in WeWork’s Tower 535 in Hong Kong.
“It created the right environment for their staff, working in the same location as other like-minded teams, including Hong Kong’s fin techs and other start-ups,“ said Trim.
By making flexible workspace an integral part of an organization’s workplace strategy, companies can not only provide employees with a valuable opportunity for choice and connectivity, but they can realise meaningful benefits thanks to flexibility.
In balancing core and flexible space needs, companies can reduce financial risks related to long-term space needs and be nimble in making changes as needed.
“Building owners can benefit from transforming underutilised spaces into shared working areas, which in turn can help attract and retain tenants,“ Trim concluded.