Co-working Spaces: The Future of Commercial Real Estate
As commercial real estate continues to experience rapid growth globally, millennials are being weighed-in as a catalyst responsible for the change in the commercial real estate climate. There has been a demand for a new kind of office that’s flexible and mindful of the present-day need to merge business, community culture and pleasure to upgrade the conventional office. Without any iota of doubt, co-working spaces are the millennial entrepreneurs’ dream and are soon to become the new normal of commercial real estate in general.
Text: Adefunmilola Adeniyi
Co-working is simply a system of work that involves different individuals that don’t necessarily belong to the same organisation sharing a workspace. Co-working spaces integrate the present day need for relaxation and the need to give individuals the power to choose how they prefer to work. Honestly, these spaces offer a more diverse range of office options than traditional commercial offices. The workspace options usually include a hot desk where people can come into work at any time and a seat (usually unreserved), reserved shared spaces (fixed desks) and private offices. Other available spaces usually include conference and meeting rooms. Some co-working spaces also provide virtual office and virtual assistant services.
Going down in history, the earliest form of co-working can be traced to C-base in Berlin, which in 1995 was founded to promote the interests of technology enthusiasts, but the establishment most similar to what we know as co-working today is Schraubenfabrik in Vienna, formed in 2002 as an entrepreneurs’ center; this was mostly because co-working as a term did not exist at the time. Staying true to its earliest form, some co-working spaces also serve as business accelerators and incubators which provide crucial, invaluable support for startups in the first stages of their growth cycle. These startups often become foreign investment magnets and job providers which eventually contribute to a country’s economic growth.
Over time, co-working spaces have evolved to become a haven for entrepreneurs, startups and large companies looking for a balance between a conventional work environment and a social hub of like-minded people. Like most entrepreneurial trends, co-working has infiltrated the Nigerian commercial space and provided an affordable alternative to renting or buying commercial office space, which most Nigerian millennials are unable to afford. In addition to providing space for these individuals, most co-working spaces also provide the day to day resources you would expect in a modern workspace. Some workspaces throw in extra perks and organise social events to foster a sense of community and build networks.
With the rapid increase in the Nigerian entrepreneurial population with 86% of young people preferring to be entrepreneurs rather than work for someone else, work trends among millennials lean more towards building start-ups and co-working spaces as an important factor in this equation. Apart from the fact that a lot of shared workspaces double as accelerators and incubators, they also serve as spaces to share ideas and connect with like-minded people. The very first co-working space in Nigeria, Co-Creation Hub (also known as Cchub), started out as an incubator for tech startups. The organisation still serves this purpose, in addition to providing free access and a fixed membership workspace plus more.
“co-working spaces have evolved to become a haven for entrepreneurs, startups and large companies looking for a balance between a conventional work environment and a social hub of like-minded people.”
Despite the fact that these spaces are tailored for work, some of them can be considered as the equivalent of working on vacation for less. Workstation in Lagos is a good example – it includes a gym and a yoga room in the same building. Seedspace, another co-working space in Lagos, has a pool as well. Owing to their nature as offices of the future, various coworking spaces have taken luxury décor to a whole new level. Crew Collective, a co-working space in Canada, renovated a 1920s bank but kept the Victorian-esque elements of the building. The result landed them the number one spot on Forbes’ 2017 most beautiful co-working spaces in the world list. This movement has given rise to other related businesses; websites like Sharedesk in the US and Optionspace in Germany are poised to become the Airbnb of co-working. A quarter of new leases in the past two years in the US came from co-working spaces and flexible workstations.
Co-working spaces represent the changing nature of work, economies and even real estate. As millennials have been reported to earn less than previous generations, new ways of work and living have emerged to help this generation adapt to this change, with those on the controlling end of economic spectrums devising effective ways to improve standards of living while enhancing affordability. This shift in the way we see work is reflected by different organisations around the globe. WeWork, which was placed as the fifth largest startup in the world in 2017, only began operating in 2010 with one office in New York. Today, according to Wired magazine, WeWork has approximately 253 locations in 22 countries and manages more than 1.3 million square metres of office space. This is just one of the companies worldwide reflecting the changing face of the modern office. The company’s mission to help people make a life not just make a living is in line with millennial values. Corporations such as Microsoft and IBM have taken co-working space for hundreds of their employees at WeWork offices.
The making of co-working spaces is a collaborative effort for various players in the real estate industry. Building owners have a chance to maximise spaces and gain profit from various co-workers at various times rather than depend on income from just one client. Investing in co-working spaces allows landlords and developers to maximise their property and add more value per square foot. Looking at the commercial office trends from the first quarter where some prime office landlords had to consider concessions in order to get more clients, co-working can prove a more viable alternative. It also provides an opportunity for office owners to expand and diversify their client base while they retain the high-end traditional office spaces.
Most real estate analysts predict that co-working won’t be the new way to work in the future, but will become the norm. This is mainly because co-working spaces are constantly evolving and are majorly influenced by the changing nature of work in the 21st century. Big commercial real estate firms are catching on to this idea and moulding their real estate models to meet this soon-to-be standard. Commercial real estate firms in Nigeria are also slowly expanding to accommodate this shift. Firms like Regus and Fine and Country—both Nigerian real estate firms—have incorporated co-working spaces into their businesses.
For forward-thinking investors, the co-working industry in Nigeria can be seen as a potential goldmine. Global co-working members numbered at about 970,000 in 2016 are projected to grow to about 3.8 million members in 2020 – an annual compounded growth rate of about 41%. Nigeria is not left out of this global phenomenon; the number of coworking spaces in the country has grown from just 3 in 2 states in 2011 to over 70 spread out in 11 states in 2018. From the mid-2000s till date, there have been over 250 coworking spaces in Africa and 80% of these spaces were reportedly founded between 2014 and 2017.
Co-working continues to influence different spheres of life as we know it and whether you’re an owner or a co-worker, you’re sharing a part of the future.
Featured in Prestige Magazine Issue 3. Vol.3 2018
