Shared office provider Venture Workspace opens in the suburbs
Landlords rent to a shared work-space provider, which then sublets to individuals, small businesses and other tenants
A new shared office provider, Venture Workspace, is opening branches in Cape Town’s suburbs instead of the inner city as
it looks to rent to small and medium enterprises (SMEs) and entrepreneurs who want to avoid heavy traffic and don’t need the added extras that high-end operators provide.
In the past few years, most shared workspace providers, including WeWork and Workshop 17, have opened offices in the city and commercial CBDs.
But Venture Workspace’s founder, Louis Fourie, says there is demand for decentralised office spaces away from city centres, as not all tenants want to rent full-service space and to work far from their homes.
Shared workspace offices are gaining in popularity.
Landlords rent to a shared work-space provider, which then sublets to individuals, small businesses and other tenants. They share amenities and tend to rent for a few days, weeks or months as opposed to being locked into long-term leases.
Stanlib estimates that less than 1% of office space or gross lettable area in SA is taken up by shared workspaces. This ranges from 6%-8% in large developed markets. Phil Barttram, executive director of MSCI, said total institutional office assets — assets owned for investment returns — make up 18.9-million square metres of space in SA and are worth R324bn.
Venture Workspace’s first offering, which opened in 2016, is in Claremont. Next month it will open its second offering in Constantia. Fourie said his business model is focused on providing space to small business owners and service providers.
"Venture Workspace Constantia will play an important role in decentralising co-working in Cape Town where traffic congestion is already a major issue. Capetonians are now losing 162 hours a year, or five whole days, to traffic, which is madness," Fourie said.
Venture Workspace’s offices do not offer the same array of facilities that international group WeWork and SA group Workshop 17 do that enables it to charge less than those other providers do.
Instead of having on-site kitchens and restaurants, the offices are in or next to retail centres. Venture Workspace’s latest share space will be located in the Constantia Emporium shopping centre.
"We are seeing that co-working in the suburbs, and specifically in retail spaces where you have one-stop access to shops, food, banking and lifestyle services, is already successful in the US," Fourie said.
The shared office spaces also help nearby retailers, he said.
"So you have tenants using the retailers but those tenants also have meetings at the work-spaces which brings more business for the retailers. The work-spaces create hubs. A vibrant coworking business hub is a major asset to a retail property and can help to shape an ideal, sustainable tenant mix," he said.
Constantia Emporium is located close to the M3 at the Ladies Mile intersection.
WeWork and Workshop 17, which are located in business nodes in Johannesburg and Cape Town such as Sandton, Rosebank and the Cape Town CBD, have tended to attract multinationals as tenants as opposed to entrepreneurs.
WeWork is a main tenant of Redefine Properties’ The Link building in Rosebank.
Redefine CEO Andrew Konig said that WeWork has rented space to the likes of technology company Naspers.
"We have seen quite a few large established companies take space in WeWork in Rosebank. You find them using the space for secondary operations," Konig said.
Old Mutual has outsourced projects that are run out of Workshop 17 in 2019.
WeWork, the co-working-space company, was valued at $47bn (R691bn) in January, when it announced it would pursue a listing earlier in 2019. That listing was scrapped in September. In July WeWork reported it was losing $219,000 hourly. In 2018, the company’s losses and revenues both doubled, to $1.9bn and $1.8bn, respectively. In October, Japanese investment firm SoftBank took control of We Work in a deal worth $8bn.
Fourie said Venture Workspace has became profitable "relatively quickly". Workspace Claremont is at 90% occupancy. Workspace Constantia is at 50% occupancy before its opening on December 1.
In the first year of trade, Venture Workspace’s turnover grew 275%, followed by 5% growth in the second year and 36% in the third year, 2018. It is projected to grow 53% in 2019.
"In general, the margins in the co-working space can still be quite low. We have been fortunate with our business model to generate continued growth and in turn profit," he said.
Head of listed property funds at Stanlib, Keillen Ndlovu, said
co-working and flexible office workspace is the fastest-
growing segment globally in the office market.
"It’s taking people and small businesses away from working from home or in coffee shops. Even the creative and innovation teams of big corporates are moving to this space," he said.
"It enables companies to grow quickly when they need to and to scale down quickly too when market conditions change without being tied to long leases. It also turns out to be cheaper than traditional office space."