File | Nation Media Group
What you need to know:
Covid-19, office space,
In 2009, the carnage of the global financial
crisis gave birth to co-working spaces in their current form to take in
the newly redundant and entrepreneurial folks.
But it wasn’t really the start-ups and
freelancers that propelled the global flex space sector. It was the
corporate organisations that started moving in, initially to profit from
the feverish exchange of ideas,
then on a much larger scale, to benefit
from short-term leases and hassle-free premises under the
space-as-a-service model, that turbo-charged the growth of the sector to
an annual growth of 31 per cent between 2015 and 2019, according to
American commercial real estate services company Jones Lang LaSalle.
Fast-forward to 2020 and the world is
facing-off against Covid-19, a virus so indiscriminate in its reach that
it brings enormous challenges to both the health of the global
workforce and our economies.
Office culture
The pandemic has also had serious implications
on the office culture as we knew it, thanks to the work-from-home
orders, social distancing regulations and lockdown measures that forced a
lot of people to work remotely.
Coming at the backdrop of an oversupply of
commercial office space in Kenya, there is no doubt that this market has
been hard hit by the pandemic. However, while everyone is going through
some turbulent time, market insiders believe in the long term the
flexible office space providers will manoeuvre through. And there are
many reasons the odds are in their favour.
Take the declining productivity for employees
working from home, for instance. When the World Health Organization
declared Covid-19 a global health crisis and several companies sent
their workers to work from home, many executives expected that
productivity would go down. Instead, the opposite happened. Many
companies reported a tremendous increase in productivity, with Twitter
and Facebook becoming the first global giants to announce that they
would allow their employees to work from home forever. Many others vowed
to give up their physical office spaces altogether.
But months into the pandemic, the initial
spike in productivity is starting to plateau and go down, much to the
disappointment of many executives.
Cracks emerging
According to the Wall Street Journal,
business-focused international daily newspaper based in New York City,
as the work-from-home experiment stretches on, some cracks are starting
to emerge. Projects are taking longer, training is tougher and hiring
and integrating new employees has become more complicated.
According to the report, some employers say
their workers appear less connected and bosses fear that younger
professionals aren’t developing at the same rate as they would in
offices, sitting next to colleagues and absorbing how they do their
jobs.
Albeit necessary for the safety of employees
and their clients, these findings have poked holes into the concept of
full time remote working as the new normal. And executives across the
globe are taking note.
“There’s sort of an emerging sense behind the
scenes of executives saying, ‘This is not going to be sustainable,’”
Laszlo Bock, chief executive of human-resources startup Humu and the
former HR chief at Google told the Wall Street Journal. According to
him, no CEO should be surprised that the early productivity gains
companies witnessed as remote work took hold have peaked and levelled
off, because workers left offices in March armed with laptops and a
sense of doom.
“It was people being terrified of losing their jobs, and that fear-driven productivity is not sustainable,” Mr Bock said.
As the debate about the future of the office
rages on, more companies and experts now envision a hybrid future, with
more time spent working remote, yet with opportunities to regularly
convene teams.
Hybrid system
“If you ask me, the future of office space
will be a hybrid system. What I mean by hybrid is a situation where you
have teams working from home and others in the office,” says Federico
Von Bary, co-founder of Workstyle Africa, a flexible workspace provider,
with two locations in Westlands.
For Winnie Gachagua, occupier services manager
at Knigt Frank, and whose job for the last seven years has been to
represent corporates in commercial negotiations with landlords, the
physical presence of an office will remain very relevant even after the
pandemic.
“I think the flexibility of being able to work
from home and the office has allowed the office to become a personal
choice rather than an obligation,” she told DN2 Property, “However, the
office still remains very essential for collaboration, socialization and
mentorship.”
But even so, she does not foresee a situation where the world will revert to the traditional office set up after the pandemic.
“Even if by sheer miracle we are able to curb
the spread of the virus and Covid-19 becomes history, I don't see us
going back into the traditional office set up or working environment
where all of us need to sit in the office at the same time,” she says.
When Workstyle Africa opened for business in
February 2018 in its first location in Westlands, their dream was to
offer space-as-a-service. They carried this dream to their next station,
which opened October 2019 and filled within three months. Here, they
offer exquisitely designed offices (private offices, office suites and
customised solutions), few co-working spaces, meeting and events space
on demand, free coffee and kitchen services for their members. Like
everyone else in this business, they were also motivated by the
inflexibility of the traditional office space.
“What we realised is that this does not work
for today's organisations. Unlike in the past when companies took too
long to grow, these days companies are growing much faster. So, the idea
of locking them in a six year lease when they are likely to outgrow the
space in three years doesn’t make sense,” says Ronald Nyairo, the other
Workstyle Africa co-founder.
Cost
There is also the fact that companies are
trying to be lean on cost, he adds, “So they look at it and say, ‘okay,
if I go the conventional way, I have to start building and buying
furniture and making all these investments upfront before I even know
how business will turn out.’ The good thing with our business is it’s a
lean pay-as-you-go solution.”
Ms Gachagua shares similar sentiments saying
that rent is a huge cost in the operation of any business. So, in a bid
to try and build financial resilience and ride the Covid-19 tide, one of
the things that a lot of companies are trying to cut back on is rent,
she says.
“Leases in Kenya are very punitive and a lot
of companies are locked in long terms leases— think 6 years— which they
can’t get out off quickly.”
When the pandemic hit, Ms Gachagua says, they
started receiving a lot of inquiries from tenants who were looking to
sublet their space, or have a conversation with the landlord regarding
surrender.
“For me that just shows that organisations
have worked out that the new working style, either work from home or
combination of working from home and having some staff occasionally
working from the office might actually be a permanent change and
something that they would want to adopt.”
While agreeing with his co-founder about the
future of work, Mr Nyairo believes that a hybrid solution gives
companies such as his an even much stronger selling point.
“The health pandemic will eventually go away.
What will happen is this company with 50 people will be like ‘we need an
office for 25 people and we will coordinate when and who will go to
work using our IT systems,’” he observes.
Scale down on floor space
For landlords, this means that the company in question will have to scale down on the floor space that they require.
The way Mr Nyairo looks at things is in such a
way that there will come a time when the company will need all its
employees in the office, maybe to bounce ideas off each other,
collaborate and strategize.
“So, instead of taking a 50-person office
which you will only use fully once in a while, you can have a 25-person
office in a facility that has access to meeting rooms and event spaces
for ever. So for that one day a month when you need everyone in the
office, for a couple of hours, you can get access to that big space and
after that you just continue paying for what you need,” he says.
Research show that the modern worker value
aesthetics, comfort, flexibility, and community in the physical spaces
they occupy while getting their job done, this is also an indication of
the changing role of the office.
“People used to come to the office to work;
that has now changed. People are working from home in their pyjamas and
getting the job done. So I think what will happen is people will be
coming to the office to collaborate and network,” says Mr Von Bary.
He predicts that the day people come to the office is the day they will do less phone calls and emails.
“While it might seem as if they are doing the
least amount of work on the day, actually, that is the time they are
doing very high value work, in form of collaborating, consulting, making
networks, and exchanging business cards.”
Work from home trend
While social distancing regulations and
lockdowns in a number of countries to battle the Covid-19 outbreak is
forcing the majority of people to work remotely, the trend has been on
the rise for a while now, with regular ‘work from home’ growing 173 per
cent since 2005 according to Global Workplace Analytics.
The organisation estimated that companies save
an average of $11,000 per year per employee for those who work remotely
part-time, with further research indicating the best scenario is 2-3
days in the office per week.
For Knight Frank, this is a trend their
international occupier research team has been observing for some time
now. “The flexibility of work as a focal culture is a trend that we have
been observing pre-Covid-19. So, the pandemic has only accelerated that
particular change and proved that actually it is possible, with
technology and obviously a few changes to the technology aspect of any
company,” offer Ms Gachagua.
To put it simply, a flexible office space also
known as “flexispace,”is a workplace designed to create dynamic
environments. They’re comprised of everything you’ll find in a
traditional office—desks, chairs, phones, computers—arranged in a way
that’s highly versatile. Ideally, the concept is meant to accommodate
the diverse needs of workers.
Traditionally, clients of flexispaces have
always been SMEs, start-ups, consulting firms and international firms
that are setting up in Kenya, but lately, Mr Nyairo reveals that his
organisation has been receiving inquiries from people who would never
have considered flexible offices as a solution.
“Recently, we had a small diplomatic mission
approach us and ask, ‘what kind of solution can you do for us?’ This has
traditionally not been a client for flexible offices. So to have a
diplomatic mission seek this kind of solution speaks to the changing
trend,” he says.
Kofisi, yet another flexible workspace
provider, with five centres in Nairobi and across six countries in
Africa, provides a variety of fully serviced and sophisticated office
space for businesses of any size.
Enterprise-grade facilities
According to Michael Aldridge, Kofisi CEO,
members working in any of their private offices and customised offices
get access to enterprise-grade facilities and professional on-site
services. Their business model is so flexible that if you are a member
in one of their centres in Nairobi, you can walk in and work from any of
their six other location in Africa without extra charges. The company
also offers bespoke Space Finder Service for businesses looking to
relocate to Africa where they search, fit-out and manage all the
workspace needs.
Mr Aldridge has also been receiving a new type
of client, whom he describes as ‘the one who wants to relocate from
their incumbent situation, whether that being because it’s faster and
quicker but I think also because of protection of the staff and managing
the teams.’
Both Workstyle Africa and Kofisi say they have seen the number of inquiries go up. The Kofisi CEO told DN2 Property, “We have registered more inquiries in the last three months than we have had in the three months prior.”
Mr Nyairo said, “We would have to go check the
numbers but I would say in the last two months we are receiving a lot
of inquiries, definitely more than we were getting before the pandemic.
But what’s more interesting to me is not that they are more, it is who
they are coming from.”
With experts speculating that the biggest
casualties of this pandemic as far as office space uptake and use is
concerned will be the traditional landlords, Ms Gachagua says that one
thing this pandemic has done is to push landlords to be more flexible in
lease negotiations.
“If you look at the market pre-Covid-19, real
estate negotiations in prime office blocks were skewed towards the
landlords,” she notes.
But not anymore, landlords have lost the upper
hand and this pandemic has brought about the much-needed collaborative
relationships between them and occupiers.
Customer-centric real estate industry
Yet another thing the pandemic has
turbo-charged is the need to have a customer-centric real estate
industry. And by so doing, real estate agents will have no choice but to
move away from just a simple product to a business line that will add
strategic value to landlords and occupiers.
For traditional landlords, things have changed
so much so that today tenants are asking for the option to contract
space as the business progress into the pandemic and landlords are also
willing to give delayed rent commencement period for leases.
“There is also a new development, which has
caused a bit of stir and controversy in the sector,” says Ms Gachagua,
in what is perhaps the biggest indicator of how far traditional
landlords have lost power.
“A lot of tenants are now asking landlords to
issue them with side letters allowing them to break the lease agreement
if the need arises.”
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