Co-working is a growing market in Africa, given the high cost of real estate and relative shortage of office space in the continent’s major cities.
There are 442 active tech hubs on the continent, according to GSMA reporting. Investors and governments are increasingly focusing on startup sectors and co-working is a growing industry, mirroring development elsewhere in the world.
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Co-working companies are also expanding, such as Workshop17, which is adding new spaces across South Africa.
“The need for high-quality and beautiful co-working spaces that offer state-of-the-art facilities and world-class services is high, especially in a growing country like South Africa. Our country has become startup, entrepreneur and venture capitalist-focused and these sectors need flexible and friction-free spaces to thrive in,” said Paul Keursten, co-founder and CEO of Workshop17.
“The opportunity to grow in a continent like Africa is very high and many governments are investing in startups and tech companies. Also, corporates are starting to see the benefits of flexible spaces, especially for innovation teams, business development teams, marketing teams and project teams.”
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With new spaces still launching regularly, is the market approaching saturation? Not according to Jolize Pienaar, general manager of the Cape Town-based Work & Co space.
“It’s definitely a much bigger market than three or four years ago, yet we still have long way to go. There is definitely a need for professional services and facilities as innovation stimulates economic growth across the continent. I don’t believe the market is saturated – at this point, I see it as healthy competition is always good for business,” she said.
However, the increasing competition means spaces need to stand out from the crowd, which many do by focusing on building startup communities and providing members with additional services.
“From day one, we have been focused on our members and the finer details that enable them to stay focused and efficient. We have been able to offer boutique services and tailor make packages to fulfill our clients’ needs. Personalized client interaction and engagement is our top priority,” Pienaar said.
“I believe co-working has come about because the traditional serviced office industry did not deliver what the modern consumer was looking for. Hence, there must be a difference between service office space and a collaborative workspace.”
When it comes to actually making money, however, there is a need to scale.
Workshop17 is one of the fastest growing co-working businesses in Africa, creating a national presence in South Africa by expanding to more cities like Durban, the southern suburbs and city center in Cape Town, and Pretoria.
“We are creating a network of spaces enabling members and events clients to tap into our ecosystem across geographical and socio-economic divides. Creating a level playing field with close-to-home access changes the value of what we offer to companies and professionals operating regionally and nationally,” Keursten said.
“Scaling enables us to invest in our systems and processes. The co-working business is an intense business, with lots of transactions daily. Scale helps to run this efficiently. It also enables us to keep our pricing reasonable while offering a high-end product and service.”
The proven ability of co-working spaces to reach scale and solve established problems has made them attractive sectors to invest in. Globally, firms like WeWork have raised large amounts of money, and this is likely to be mirrored in Africa.
“In Cape Town especially, space is becoming more and more valuable as the city grows and property values seem to always be rising, along with the reinvigorated entrepreneurial spirit,” Pienaar said.
Keursten agreed the co-working sector has grown immensely over the past couple of years, and said European trends show that the co-working market has the potential to grow by an average of 30 percent per year over the next five years.
“Co-working has boomed in South Africa, especially in Cape Town which is one of the top startup capitals in the world. Workshop17 alone has seen a member growth of 267 percent from 2017 alone with more than 280 organizations,” he said.
But there is also a caveat when it comes to making a success out of a co-working business. It isn’t an easy game.
“It requires investment and long-term commitment. It can go wrong if one overinvested, (is) in the wrong place, has a product that is not aligned with the demand, or runs an operation that is too costly,” said Keursten.
Tom Jackson is co-founder of Disrupt Africa, a news and research company focused on the African tech startup ecosystem.