Getting the right office space may seem daunting to a new start-up or entrepreneur particularly when budget is limited, your base location isn’t decided on and your team is small. – 04 October 2012 | ELEANOR SEGGIE
One option is to share office space.
Regus area director Kirsten Morgendaal says, “People don’t want to work from home anymore, they want a lock-up-and-go professional business environment that they can go to most days and that is preferably near home so it reduces their travel time to and from work. She adds that shared office space leasing is far more in demand than a year ago.
“From a tenant perspective, the focus is very much to keep themselves buoyant or mobile in the market.
They don’t want to be tied down, they want the flexibility of being able to cut and run if they have to or claw back if they have to. That type of flexibility is an advantage to any business currently,” says Bradley Porter, founder of Flexible Workspace.
She says other advantages are the flexible terms, no capital outlay, networking opportunities and the ability to focus on core business activities, hence speedier business incubation. As Ash Brook Commercial Properties CEO Grant Williams says, shared office space is generally coupled with added services such as furniture, telephone, fax, IT (internet/video conferencing), conference facilities, boardrooms and a shared receptionist. It also allows you time to find more permanent location.
Regus’ Campus product – offering a full-time, permanent desk in an environment shared with other business people “at a fraction of the price of permanent office space”.
Williams says it allows flexibility, no upfront capital investment, no contracts with third party vendors with serviced office options, its professional look and feel, and its location – generally in central office nodes – allows for easy access for clients and employees.
However, whether or not it is affordable is debatable.
Williams says, given its add-on services, it “garners a higher average rental than conventional stand-alone offices”.
He says shared/serviced office rental can range from R400/m² to R600/m².
Conventional stand-alone offices cost between R75/m² to R200/m² without additional services, he says. Regus says the average price in Johannesburg is about R3 000/month (ex VAT) which includes furnishing, utilities, telephone-answering in the company name, a full reception service, facilities management, access to meeting rooms and access to between 250m² to 700m² of common space. It also offers access to all Regus Business Lounges.
Flexible Workspace says the cost of its office space is usually calculated per workstation and depends on the number of workstations, location and the size of the office. It includes space-related services such as cleaning, utilities, facilities management and reception services.
Ash Brook says companies can enter into short-term leases with shared office space, from one month upwards. Generally companies enter into three to six month leases, depending on their business expansion plans.
Williams believes this is an ideal period to find permanent office options as the process for locating more permanent offices takes about three months.
Regus says its leases are generally eight to 12 months, while Flexible Workspace said 12 months.
Which are the most popular areas for shared office space? Ash Brook, Regus and Flexible Workspace all say Sandton. Williams says other popular areas in Johannesburg for shared or serviced office space areFourways, Bryanston, Rosebank and Parktown.
Regus’ Morgendaal adds Midrand and Woodmead to the Jo’burg list. In Durban, she says Umhlanga is very popular as people are moving out of the city, with Flexible Workspace adding Florida Road in Durban.
No data was available for Cape Town.
Think before you jump
Williams advises potential leases to consider all their alternatives and undergo a thorough due diligence before committing to a shared office lease.
“Smaller companies often do not realise that operating their own office space will be much cheaper in the long run. Even listed property funds have small pockets of space that are financially more viable for companies,” he says.
He adds that start-ups and small companies should consider their future business expansion plans, and engage with an agent early on in the process. Morgendaal says, “If it sounds too good to be true- it usually is.
If they are trying to undercut wherever possible be weary.”
By Brad Porter