Corporates have an eye on co-working spaces
Troy McTeer, Leasing Broker at JLL, says co-working isn’t what it used to be, and South African corporates could soon be adopting an international trend.
Co-working spaces have traditionally been the territory of freelancers, entrepreneurs, start-ups and incubator hubs. Individuals or small teams of two – five people sharing office space, unencumbered by a long-term lease while they get a business off the ground. The appeal is easy to see: flexible, affordable spaces with a host of amenities and one fee for all operating costs. As revenues and employee numbers grow, property brokers would approach with offers to relocate to more conventional office space and the opportunity to bring a brand to life in space of their own.
While this scenario is still very much the case in South Africa, times are changing and with it the corporate approach to work. Global trends in Europe and America are seeing big corporates taking space in shared office environments, attracted by the collaborative benefits that fuel innovation. There is a growing movement of large tech corporations taking, approximately 1000m2, in a co-working space to house a special projects team. They can work semi-independently with the signature amenities and flair of co-working while still maintaining an element of privacy and benefiting from the full resources of a global brand.
The stats suggest co-working spaces for corporates are being viewed as viable alternatives to traditional offices. A significant percentage of 40+ desk co-working deals are being signed by larger, more mature clients. 25% of WeWork’s (global network of workspaces) revenue is generated by big business and research confirms that the number of multi-nationals adopting the trend has doubled since 2016. Facebook recently signed a five-year lease to become tenants at WeWork’s main offices in California, in the largest lease WeWork has ever drafted.
It’s a movement that is motivated by the millennial workforce’s demand for open flexible collaborative work environments. For big company’s looking to attract the right talent, shared working space can offer that all-important sense of community, with all the innovative, creative, team-based benefits the modern worker craves. It seems innovative breakthroughs can really fly in an environment somewhat detached from the hierarchies and ‘red tape’ so common in large organisations. And then there is the cost-saving aspect. It can be more cost-effective to rent nearby flexible workspace than relocating to bigger offices or adding more square metres to your corporate lease.
South African companies are slowly latching on to the concept with a small number leasing flexible shared space close to their existing office space to accommodate specialist teams working on, for example, digital strategies. As the nature of work evolves, companies are also turning to contract-workers to fulfil certain project-based roles within their organisation, which plays perfectly into the co-working space.
It’s a largely untapped space in the multinational world, and progressive management teams should include the concept in their business strategies. It requires a mindset change but for companies looking to disrupt corporate culture and brokers who understand the positives in the co-working market, there are excellent opportunities to explore.