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Are Shared Workspaces Part of the Solution to Corporate Downsizing?

Are Shared Workspaces Part of the Solution to Corporate Downsizing?

The challenging COVID-19 situation has forced countless corporate entities across the planet to reassess their workspaces, with many indicating a desire to downsize operations as an effort to cut expenditure in the short term. Considering the inclusion of shared space offerings, as part of the overall solution, may provide corporate clients with just the right balance of space and tools that their staff members need to work, while increasing flexibility and reducing the heavy fixed overheads of traditional offices.

Broll Property Intel's latest research report, Shared Workspace Snapshot, looks at ways in which Nairobi shared office providers are helping to ensure that key economic contributors can continue operating - with managed offices and other shared workspace models.

Broll's latest insightful report shows that an increased need for 'plug and work' models in all major hubs is what has been driving the growth of shared workspaces in Kenya over the past 10 years. This is due to the strong appeal of flexible occupational terms, as compared to the often rigid nature of standard commercial lease terms.

Operators in Nairobi tend to offer three types of offerings: serviced offices, co-working spaces only, or a hybrid model, with the majority of operators opting for the mixed model.

"Over the last decade there has been an increased demand for co-working offices from both local and international office space users. This has resulted in most of the operators focusing their business strategy to cater for the higher end of quality in terms of offering and location. With the ongoing travel restrictions, however, we have seen that the immediate demand for shared workspaces has shifted from international to local users, especially those requiring smaller spaces.", says Jess Cleland, Group Managing Director of Broll East Africa and Indian Ocean.

The current estimated supply of shared workspace in Nairobi is 51,000m2 (as at first quarter of 2020), with Westlands having the highest concentration of the total existing shared office space with 37%, followed by Kilimani with 22% and Riverside with 15%. The popularity of these nodes for shared workspace operators mirrors their status as the most popular business districts in Nairobi, which are favoured by multinational corporates due to quality stock and amenities. A pipeline in excess of 6,000m2 had been planned to come online during the next 12 months, but at least some of this growth is expected to be placed on hold due to the COVID-19 outbreak.

When looking at the major serviced and co-working shared workspace providers in Nairobi, the Broll Property Intel report reveals that there are 22 in total, including major providers such as Regus (10 outlets), Kofisi Africa (5 outlets), and Nairobi Garage (4 outlets).

In the short term, the relative flexibility of shared workspace licenses may lead to an initial reduction in occupation, as this space is the first option to exit for some companies due to the statutory requirement of fixed minimum lease terms in Kenya. In the longer term, however, it is anticipated that the interest for shared workspaces may rise, as tenants occupying shell and core spaces may downsize in favour of more flexible space options.

"With the sudden, forced adoption of agile working, many companies are now rethinking their office space requirements - both in terms of the size of space needed but also what activities their space should promote. In the long term, we expect that there may be an increase in the overall take up of shared office space, driven by a refocus from 'cost of occupation' to 'cost of production'."

"The world as we know it has been pushed onto a different trajectory, and the same is true about the commercial property market. Shared workspaces offer a different approach to doing business - and although we don't expect it to replace traditional leases entirely, we foresee many companies opting for a hybrid approach that delivers the best of both worlds.", says Jess Cleland, Group Managing Director of Broll East Africa and Indian Ocean.

Discover more interesting facts regarding the growth of Kenyan shared workspaces, and other insights touching on - among other facets - fixed rates and variable costs, by downloading the Broll Property Intel Shared Workspace Snapshot report here:


Broll Property Group

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