Demand for co-working spaces in Nairobi skyrockets

Friday, November 5th, 2021 00:00 |
One of the Kofisi Africa Photo/coworking spaces. PD/HARRIET JAMES.

Affordability, flexibility and accessibility are some features attracting companies to spaces they can hire for a day or for  a specific period depending on their needs.

For some, especially new companies and startups, the appeal of a owning an office space without spending hundred of thousands of shillings in initial set up, goodwill and property costs is driving the rise and acceptance of co-working spaces.  

According to Cowork Booking, there are over 35 coworking spaces in Nairobi with others opening up outside the city.

With the pandemic disrupting the traditional model of working, those who could not work from home picked up spots in co-working spaces to get work done. Companies are using this option as they adapt to flexible working practices.

A report by Knight Frank indicates new office space requirements increased by 29 per cent in Q2 2021 compared to Q1 across Africa.

This increased office market activity has been attributed to the ‘flight to quality’ trend that has seen businesses taking advantage of weakened prime office rents to occupy office spaces that place employee wellbeing at the forefront as well as improving economic outlook across most of the countries. 

“Occupiers remain focused on occupying best-in-class offices that offer greater flexibility around lease terms.

The desire to occupy the best office buildings is driving up tenant lease space in cities’ Grade B buildings — something that is likely to fuel greater disparity between the performance of Grade A and Grade B office rent.

This presents an opportunity for landlords of slightly older buildings. If refurbished to modern standards, they can compete effectively for tenants looking for high quality offices,” explains Tilda Mwai, senior researcher, Knight Frank Africa. 

In Nairobi, prime office rents dropped marginally by one per cent quarter-on-quarter due to lockdown restrictions imposed at the onset of Q2 2021. 

Predicted demand

 However, the Registrar of Companies indicates a 25 per cent month-on-month change, with 8,483 companies registered in July compared to 6,786 companies in June 2021. Knight Frank anticipates this will increase demand for offices later in the year.

Now, owners are converting old buildings to coworking spaces. Unlike the more traditional serviced-office model, co-working tenants, or members, share a range of facilities such as furniture, printing, phones, operational and technical support.

They also share costs including property, internet, and energy. Leasing space on a membership basis often result in lower costs than renting a regular office.

This collaborative and effective means of taking space is attractive to firms that want flexibility, such as small and fast-growing companies, freelancers, technology and media firms or any business that can thrive in this version of the modern workplace. 

“We knew delivering a productive workspace for business was much more than just providing a desk and a chair.

To motivate and engage employees, we needed to deliver sophisticated office space with a great atmosphere and a supportive community, with hospitality services to assist business, with additional office amenities such as meeting rooms and phone booths and to make sure every day at work was hassle free and 100 per cent productive,” says Michael Aldridge, CEO of Kofisi Africa, a company offering co-working spaces.

Kofisi has six centres in Nairobi —two in Westlands, two in Riverside and one each in Karen, and Upperhill.

They also have centres in Lagos and Dar es Salaam. Their prices include superbly designed workspaces, wifi, unlimited free, artisan coffee or tea throughout the day, professional reception and hospitality services including printing and bureau services as well as access to all networking and member events. 

Teams can work from 12 different locations around each of their centres depending on how or where they want to work.

They also offer member lounges, phone booths, private work pods, rooftop cafes, outside workspaces, meeting rooms of all sizes and conference facilities in Nairobi.

The centre in Westlands has a specialist media suite and podcasting studio for content creators, a first for the city.

“Our co working spaces are Sh16,800 (US$150) + VAT per month and our private office prices start from Sh55,600 (US$500) + VAT per desk per month.

All our Memberships give you and your team access to all our spaces and the amenities within them for free.

If your team wants to work from Karen for the day, or if you have to meet clients in Westlands or Dar es Salaam, they can use the spaces there,” says Aldridge.

Promising future

He adds that this model is disrupting the real estate market as they are receiving more inquiries, with companies asking for office space inside their centres. 

“They’re often switching from a longer term traditional lease, having realised they can get more space for less cost. Businesses now see space as a service and not as an asset anymore,” he says. 

Kanorio Gitonga, founder of Nook Coworking Space was working at an advertising agency. She was always stressed and couldnt access any place to just breathe. 

“Based on this experience, my goal was to create a network of spaces that offers a quiet work environment and to the human aspect of work.

I wanted to include spaces where a person can have an emotional breakdown, for example, or take a break to nurse a child: something soft, natural and feels like home.

After studying the market and what was realistic at the time, I put together these elements to create a co-working space that focuses on comfort,” she explains. 

Located at Western Heights, Karuna Road, Nook charges Sh1,500 per person for daily entry and have an hourly boardroom rate. 

“Westlands is an in-demand area and the rent is high because of its centrality and proximity to malls.

The quality of the interior is another factor. We went for top quality cladding and glass partitions.

For that price, we offer a HD TV for presentations, imported hardwood desks with storage, a fully-fitted kitchenette, high-speed Wi-Fi, a fridge, microwave, receptionist services, 24-hour security and daily cleaning,” she continues. 

The response has been positive since the space was opened up early March last year thanks to the pandemic that introduced the culture of working from home. 

While property is a great investment as it requires heavy initial capital, the maintenance after finding clients is minimal.

However, Kanorio warns that if there is little demand, the investor is losing a large sum. 

“If the investment came through a loan, then lack of clients spells deep financial trouble. The real estate industry has definitely taken a dive because of the pandemic.

People are moving out of offices as opposed to moving in because they want to cut their costs.

Conclusively, I’d say the challenge is the very high risk factor,” says Kanorio. 

The future of this office market segment, she says, is promising due to the price structure which is favourable to most companies.

More on News