Over the past decade, coworking spaces have fulfilled the needs of different businesses. From networking and Internet connectivity to cost efficiency and reduction in overhead cost, they have served as a valuable alternative in place of traditional workspaces and working from home.
However, this year has posed one of the greatest challenges the coworking market has faced. The coronavirus crisis and lockdowns have resulted in many coworking spaces leasing their spaces entirely or for some, shutting down for a while.
In most parts of the developed world, rent is paid monthly, but it’s a different case in Nigeria. The country has one of Africa’s most rigid rent payment systems where most people make a down payment of not less than a year, and coworking spaces are not exempt.
Most of them rent their spaces and pay yearly, and then offer short term leases to startups and individuals. So, the disadvantageous business models Nigerian coworking spaces operate make them a ticking bomb waiting to go off.
“We lost 50% of our clients. We also had to offer some concessions to businesses that didn’t use their spaces during the lockdown,” he says to Techpoint Africa.
Similarly, other spaces in Lagos, like the Co-creation Hub and Leadspace, closed their workplaces and encouraged customers to work remotely.
Surviving during the lockdown
While this was going on, there was an ongoing debate on how the coworking market would fare should the crisis persist.
One school of thought argued that the dense population of coworking spaces doesn’t allow for social distancing. Consequently, many startups and freelancers will work from home and might not return.
Due to the lockdown, Abuja-based coworking space, Work and Connect completely shut down operations for two months and Felista Aku, the Business Development Manager of the coworking space, thought this might be the case going forward.
“Truth is, Nigeria has never experienced a thing like this. This made it very difficult to make certain right predictions. In the midst of it, we kept our hopes alive that life would return to normal in a matter of time,” she says.
This was also a sentiment shared by Adewumi Babafemi, Wennovation Hub’s ex-Campus Coordinator for Ibadan. Speaking with Techpoint Africa in March, he said while innovators at the idea stage will still see the need for coworking spaces, those in the growth stage might not and “they might see that they can stand on their own or work remotely.”
Despite the uncertainty around coworking spaces reopening or not, Felista says Work and Connect was able to meet the needs of some customers by focusing on its virtual office package, as well as video conferencing services.
The reopening of spaces and safety measures taken
The other school of thought believed that because customers will seek flexibility, coworking spaces will provide new models centred around health, hygiene, and flexible leases.
McIver seems to agree. The way he sees it, businesses still needed coworking spaces despite the rise in coronavirus cases.
“We never thought that normalcy wouldn’t return because the flexible workspace model is attractive to a lot of businesses and helps them reduce their exposure in an economy characterised by volatility, uncertainty, complexity, and ambiguity (VUCA).”
However, MusterPoint was going to imbibe a hand hygiene culture, something rarely observed by coworking spaces before the pandemic. After resumption in May, it installed a hand sanitiser dispenser at its entrance and a hand wash point in the vicinity.
Additionally, McIver says everyone who comes in has their temperature checked before they are admitted. And “we also insist on the use of facemasks and do routine disinfection of common surfaces several times a day.”
Likewise, community members’ safety remains Work and Connect’s priority. The coworking space, which opened a month after the government’s first phase of eased lockdown directive, carried out thorough disinfection of its building and rearranged coworking stations to ensure social distancing.
While it is also putting safety measures in place akin to MusterPoint’s, Felista says the workspace is doubling down on its efforts to ensure customers are safe.
“We understand that people are prone to disregarding these safety measures after a while. But in addition to placing reminder signages at strategic points within the facility, we make it a point of duty to reiterate their importance from time to time.”
Exploring new business models
In Nigeria, it seems coworking spaces are attaining a certain degree of normalcy. But they’re not there just yet.
According to Google’s mobility report, Nigerians’ workplace activities (which include working from coworking spaces) have reduced by 22% compared to pre-lockdown numbers. In the FCT and Lagos, the numbers are at 25% and 30%.
Similarly, residential activities (which include work-from-home) have increased by 12%.
This explains why activities haven’t picked up at full speed in coworking spaces. But Felista says that while Work and Connect is yet to recover, businesswise, it’s in the process of doing so.
“For now, I can say that every month is better than the previous one. And beyond clients who work from our space, a lot more people are beginning to hold meetings and training at our facility.”
MusterPoint is also in the recovery stage and in the coming months, the coworking space thinks it might get back to pre-lockdown numbers.
The company has also introduced a new offering: Proximity Workspaces. What it does is to offer businesses workplaces that are closer to where their employees reside so they do not need to travel some distance to work from MusterPoint’s main location.
According to the company, Proximity Workspaces was born due to the challenges posed by the pandemic. And the claim is that the new offering can save a company up to 50% in real estate costs and help solve overconcentration in a single location.
But what happens to the coworking market should a similar event of pandemic-magnitude happen again?
For Felista, there are many lessons to learn from the pandemic that is still raging. In her opinion, these operators will begin to think of other revenue generation models asides from renting physical spaces. Also, companies are noticing that they can work remotely and still be productive. She believes that to an extent this will benefit coworking spaces.
“Companies are beginning to look into splitting their teams and having few people work from a coworking space rather than having a traditional office with all the overhead costs associated with it.”
McIver, on the other hand, thinks this is the time for coworking space operators to forge strategic partnerships with their respective property owners and look for ways to share the risk in the event of another pandemic.
“This, I believe, will reduce the impact of another pandemic on the survival of the coworking industry,” he says.