Co-working spaces – A commercial property investment opportunity in SA

Companies, entrepreneurs and start-ups in South Africa are increasingly seeking solutions that allow employees to work more flexibly – avoiding the time and inconvenience of traffic and the cost of office space while still having access to the tech, infrastructure and power they need to work effectively. The international trend of co-working spaces is an ideal solution – and an opportunity for commercial property investors too.

What are co-working spaces? 

These are flexible workspaces where employees from different companies can share the resources they need, either as groups from the same company or as individuals. These spaces are fully-equipped with all the essential tech, office furnishings and creature comforts that high-quality offices provide, from tech support, printers and scanners, fibre internet and cafeterias to ergonomic desks and even meeting spaces.

Companies and freelancers are able to rent as much of the space as they need for as long as they need it, reducing their costs effectively while still providing employees with everything they need. This makes them ideal for new businesses, smaller businesses who want to reduce operating costs, or businesses who are interested in allowing employees more flexible hours and work arrangements.

Co-working spaces as a commercial property investment 

These spaces are on the rise and are set to make an interesting impact on the commercial real estate space. Due to the innate flexibility of tenants, the challenge of finding a single or large long-term tenant to fill a large space simply vanishes – effectively removing one of the biggest risks to commercial property investment. Instead of trying to find a taker for a 5 or 10-year lease, you just add new desks for each new employee.

This is also a good thing in a time where economic growth is low. Usually, this puts a lot of strain onto commercial property investors because companies are downsizing, it’s more difficult to find tenants and there’s less security that your tenant will make it. This has actually helped encourage the rise of co-working spaces as companies look for smart ways to cut costs – shared spaces are now far denser than office spaces.

Another factor is how trendy co-working spaces have become – in the USA, they’re the preferred option for Millennials, the group that will make up the majority of the workforce in a few years. These spaces are a better fit for people how want flexible working conditions, for freelancers, creative industries and even people who want to reduce their carbon footprint.

According to surveys, co-working spaces can yield 2-3 times more revenue per square foot than traditional office spaces in the USA – and SA is poised to take that same jump. With urban traffic at its highest, Millennials showing their preference for flexibility and independence, and businesses looking for ways to save money in a low-growth economy, we have all the signs that co-working spaces will be on the rise.

Jason Scholtz is the CEO at Envision Investments and a leader in the property and strategic investments industry in South Africa. For more investor tips and an insider’s look into the South African market, be sure to get in touch, keep an eye on this blog or visit http://www.envisioninvestments.co.za/

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