Adapting to Change: The Rise of Flexible Workspaces in a Hybrid Work Environment
Paul Stevens, CEO of Just Property, takes a deeper look at the context and the unique opportunities this presents for property investors.
The global workplace is undergoing a transformative shift. The COVID-19 pandemic didn't just change where we work, it changed how we think about workspaces altogether. As businesses worldwide embrace hybrid models combining remote and in-office work, the demand for flexible workspaces is on the rise.
Global trends and the shift to hybrid work
While many of us have discovered that we can work from home, most of us still benefit from working on-site at least some of the time with our colleagues. This is especially true for entry-level or new employees and roles that are of a practical-collaborative nature. It’s much harder to assimilate into a company culture, get feedback from colleagues or network with senior members of staff from a laptop at home. In fact, onboarding new recruits is a frequently cited reason for heading back to the office.
Industry professionals agree that the office is here to stay but with a growing trend of flexible workspaces within the hybrid work environment. As businesses embrace hybrid structures, flexible workspaces such as coworking spaces have become crucial for supporting collaboration, innovation and employee well-being.
Opportunities in South Africa
The rise of flexible workspaces in South Africa mirrors global trends. Driven by the growth of hybrid work models, businesses are increasingly shifting towards flexible office solutions, allowing them to scale their physical workspace as needed. This trend is gaining momentum, particularly among entrepreneurs, start-ups, freelancers, and small-to-medium enterprises (SMMEs), which form a significant portion of South Africa's business landscape. Shared workspaces offer cost-efficient solutions, as they typically come with all-inclusive services like cleaning, utilities, and maintenance, which reduce the overhead for businesses.
For property investors, this represents a major opportunity. The expansion of coworking spaces across South Africa, particularly in urban centres like Cape Town and Johannesburg, is being fuelled by demand for flexible leases and the ability to downsize or upscale office space on short notice. This flexibility is especially important given the country’s economic volatility and ongoing challenges like load shedding.
Property investors can capitalise on this by converting underutilised or vacant commercial properties into coworking spaces. Hybrid working has become a strategic solution for companies aiming to attract top talent, reduce overheads, and increase employee satisfaction. This trend also extends beyond the major cities into suburban and smaller towns, creating additional opportunities for investors across the country. Coworking spaces are evolving beyond shared desks to provide diverse work environments that foster networking, innovation, and collaboration. As more employees work remotely, demand for flexible spaces like hot desks, private offices, and day passes has surged.
Moreover, investing in flexible workspaces aligns with the growing emphasis on sustainability and well-being. Modern companies are increasingly interested in environmentally friendly buildings that promote employee wellness.
Key Considerations for Property Investors
Property investors can approach the rise of flexible workspaces and hybrid work models by adapting their strategies to meet the demands of the evolving work environment:
- Flexible Leasing Models: Offer short-term or month-to-month leasing options to attract businesses looking for flexibility in managing their office space needs. This can help fill vacancies more quickly and appeal to start-ups and remote workers.
- Invest in Coworking Spaces: As coworking spaces rise in demand, property investors can either develop their own coworking spaces or partner with established coworking brands such as Neighbourgood, Spaces, and Inospace. This can attract freelancers, small businesses, and corporations that need occasional or part-time workspace.
- Dynamic and Adaptable Spaces: Focus on properties that offer dynamic layouts, allowing tenants to easily modify spaces to suit different needs, such as collaboration areas or quiet zones. This modularity can make properties more attractive to tenants looking to adapt quickly without significant costs.
- Conversion of Spaces: As demand for traditional office setups decreases, explore converting office spaces into mixed-use properties or coworking hubs. This repurposing can increase property value by attracting diverse tenants, such as those seeking retail, hospitality, and office space under one roof.
- Sustainability and Wellness: Consider properties that promote sustainability and well-being with energy-efficient designs, wellness amenities (like gyms or wellness rooms), and ample natural lighting to meet modern demands.
- Technology Integration: Differentiate offerings by incorporating technology that enhances tenant experiences, such as smart access systems, automated lighting, and digital workspace management tools. These features can attract tech-savvy companies and ensure properties remain competitive.
- Target Suburban and Secondary Markets: With hybrid work models encouraging employees to work closer to home, there is increased demand for workspaces in suburban and secondary markets. Property investors can capitalise on this by developing or acquiring properties outside major urban centres.
Challenges to Consider
While there are many factors for investors to consider, adapting to the changing workplace can prove lucrative with the right policies in place under expert management. That said, there are some negative aspects that investors should be aware of:
- Increased Administrative Burden: The vetting of individuals and management of these contracts can be very onerous, so landlords looking at co-working or hot-desk scenarios will need a strong administrative department.
- Marketing Efforts: Marketing will be a constant requirement. A keen knowledge of your target market and how to attract them will be critical.
- Security Concerns: Additional security may be needed to mitigate the risk of irregular and ever-changing traffic through your doors.
- Operational Costs: An attractive workspace means the provision of security, cleaning staff, and other consumables may result in more administration and costs for the landlord to factor in.
Flexibility is no longer a luxury but a necessity. Property investors who pivot to provide flexible workspaces that meet the evolving needs of businesses and employees will be poised for success. This is the moment to reimagine investment strategies and capitalise on the opportunities that this new landscape offers.