Working remotely seems to be evolving at the speed of light. Covid, riots and the floods dramatically altered how people viewed their offices, writes Bradley Porter.
While we are still dusting ourselves off from the aftermath of Covid, an “insurrection” and the floods, it may be hard to see but the demand for flexible workspace which accounts for 2% of the commercial office space, is projected to grow to 30% in the next eight years. That 2020 data comes from international property brokerage Jones Lang Lasalle (represented locally by Lambie Sparks).
We tested this data early 2021 in uMhlanga and found this to be bang in-line at 1,97%. To bring this home, this means that flexible office space in the uMhlanga area alone will grow from 7 650m² to 114 750m² by 2030.
What this means is that more buildings will have to be tailored for flexible workspaces. The age of relying on buildings for passive income are behind us. As Bheki Mdluli from Stratprop said, “buildings are businesses”. They are ecosystems. They have personalities and idiosyncrasies. You need to work them hard to trade on that. People don’t just need an empty space to work from, they want comfort, security, convenience, connectivity and a vibe.
I liken it to the coffee market. In 2004 I came home from a stint in London and couldn’t find a flat white, a macchiato or even a humble espresso. Barista coffee was a rare thing. Fast forward to today and any self-respecting venue that doesn’t boast a barista-style coffee isn’t taking themselves seriously enough.
Stratprop’s founder, Frank Reardon, says that across the city vacancies remain a challenge leading to rents continuing a stubbornly sideways movement or in some areas even declining. The only real activity they are seeing is in the contact centre space and this is concentrated in the uMhlanga area.
We see two major trends that support this data – companies want smaller spaces and don’t want to commit for long periods. Minimising risk is the main driver in the “pandemic induced” paradigm shift, highlighting the value of flexibility.
But the way we work was changing, even pre-Covid. The rising costs of labour and transport coupled with the exponential advancements in technology were encouraging businesses to save money while addressing the needs of employee benefits. When lockdown emptied offices overnight, businesses had to adapt.
The pandemic and the economy have been a dog-show leaving many businesses damaged and some broken beyond repair. The still-to-be-realised longer-term affects will render landlords losers if they are inflexible and don’t view their buildings as responsive businesses.
Occupiers want low risk, short-term, small spaces that offer employee well-being (mental and environmental), fast reliable uncapped internet, business continuity, back-up power, the ability to network and share ideas and good coffee. Space is a service and it will fuel buying behaviour as consumers become spoilt for choice.
To respond to this I founded Connect Space in January 2021 with my business partner, management consultant Brett Holding. Having been in the serviced office industry for more than 17 years I help landlords navigate this strange world where bricks and mortar meet hospitality and marketing.
We launched our concept with two sites (in Musgrave and uMhlanga) totalling 3 000m², and have since had another 1 500m² come on stream in Mount Edgecombe. We expect to triple this total by the end of 2023 as more people embrace new hybrid workspaces. We are seeing that people want spots in decentralised nodes like Ballito, Durban North, Westville and Kloof.
We are finding that users want to tailor their requirements to meet their immediate needs and budgets. A nomad can have unlimited access in any one of our locations for as little as R570 a month, a small team can rent a meeting room for R140 an hour or host a session for a few days in one of our training facilities.
With our occupancy averaging 70% over the past 18 months, our landlords are enjoying decent rentals, especially those who understand customers don’t want to tie themselves to long-term commitments. Instead, they want convenience and flexibility.
A case in point, an uMhlanga landlord we had been introduced to was faced with a 1 000m² vacancy in early 2021. At the same time, we had a customer outgrowing an existing space in the same building, so we engaged. Our proposal was that we “plant” this customer in 200m² with a view to unlocking the balance of the space. They were receptive but retained a healthy scepticism. In the end, with few other options being tabled, they accepted our offer. Within a year our customer grew to cover the entire 1 000m².
We can do this because we identify the right spaces, manage the systems and processes, provide the best environments at the right prices, attract and retain the right users and give them the best customer experiences all the while keeping our landlords informed with transparent and regular reporting. To repeat what Bheki said: buildings are businesses.
FOR MORE INFO: www.connectspace.co.za