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Changing dynamics of co-working space
Investors and users of co-working space are apprehensive about the stress in the emergent sector as a fall-out of Covid-19 pandemic. Analysts say there has been 72 per cent decline in the number of users and 67 per cent drop in new membership enquiries within the first-half of 2020. OKWY IROEGBU-CHIKEZIE reports that operators are worried about its changing story and have devised strategies to confront it.
CO-WORKING space is one of the high growth areas in Nigeria’s real estate market. Its growth was driven largely by the emergence of startups and the migration from costly office spaces.
When it started in the US in 2005, it was not much to reckon with but today it has grown to about 30,000 co-working spaces globally with an estimated 1.18 million users. Africa’s large millennial population, according to a new report by Northcourt on Nigeria’s real estate market, contributed to the growth of co-working on the continent and recorded more than 600 co-working spaces with Nigeria ranking highest.
An Abuja realtor, Okechukwu Agu said the COVID-19 pandemic upset the sector with its protocols such as social distancing, face masking and other details to keep safe.
Agu noted that tenants are unable to use and, consequently, pay for space, advising that investors in this space need to significantly adjust their business model and implement measures to continue business as working from the office (WFO) has switched to work from home (WFH).
The effect of this is that the use of office space has reduced with some corporate head offices mandating that as much of 90 per cent of their workforce work from home. This will influence future demand.
“The introduction of hygiene protocols is now mandatory. Co-working has been crippled by social distancing rules adopted to curtail the spread of COVID-19. Lagos, with the largest concentration of co-working spaces in Nigeria of over 60 per cent and a leading part of Nigeria’s co-working sector, is estimated to have lost N300 million in revenue.
To survive, he said, co-working spaces will need to pivot. More people will want to work from home, mid to long-term. Digital networking events are already taking the place of physical meetings and focus is shifting to providing more support for members over the standard space and physical resources.
As the world conforms to the new conditions for doing business, analysts see coworking spaces facing challenging seasons ahead. Corporate Nigeria has kicked the execution of remote working strategies into high gear with some head office complexes emptied of some of their staff.
It is hoped, however, that as large organisations optimise their operations post-COVID, co-working spaces will serve as a welcome alternative. The adoption of remote working post-pandemic is likely to increase, encouraging work from close-to-home co-working spaces where residences are not conducive enough.
A real estate lawyer in Ikeja area of Lagos, Nkem Ogonsiegbe, advised that co-working space investors would need to attract and keep larger and more-established clients looking to optimise administrative costs, adding that companies need to set up a more distributed workforce to better manage employees working from different locations. He said this can only be patronised if there is strict adherence to Covid-19 protocols.
According to him, no employer of labour will want to risk the safety and health of its workers.
He said: “Operators or investors in the sector may increase their rentals to augment for the loss of revenue from tenants as a result of the observance of the pandemic protocols which require lesser number of people occupying a larger space. They can also attract more clients with competitive infrastructure, discounts etc,” he added.
Changing dynamics of co-working space