How recession revolutionalises office rental business in Nigeria
Notwithstanding the effect of the nation’s economic downturn on investments in the real estate industry, the rental market has remained vibrant with the emergence of co-working space stations for businesses and entrepreneurs.
Before now, co-working space stations were considered alien to the Nigerian business landscape but experts said about 80 percent of Nigeria entrepreneurs and investors are now adopting the model in their rental needs.
With the recession, where both small and large -scale businesses are finding it difficult to find office spaces that could fulfill their needs without necessarily borrowing, the model is expected to become the new face of office rentals in Nigeria for decades ahead.
In some cases, the office spaces range between 15 square metres to about 21 square metres, while there is also one-man office, two-man office and four-man office.
Apart from its affordability and low cost, the model comes with payment flexibility and provision of some basic office facilities in a serene environment.
According to experts, more businesses are expected to adopt the model because of the several unique selling points it provides.
The Group Managing Director of Fusion Group Facilities Management, Ikeja, Mrs. Oluwatoyin Edun, said workspace station is a new innovation in Nigeria, which is quite popular in developed countries.
The concept, she said is based on the concept of shared services, cost reduction, enhanced efficiency.
According to her, the concept also allows clients to have offices whereby they own space dedicated to their company and a virtual services which avail companies to have operators address as their office address, get a dedicated phone line for their company and use the operator business lounge like an airport lounge with a professional environment to hold meetings with clients.
For the Chief Operating Officer of Workbay Co-working Space Station, Maryland, Mr. Oseni Olanrewaju, clients have the opportunity to get what is called the virtual office service that goes for as low as between N10, 000, N25, 000, N35, 000, with a virtual address to their business, reception support services but limited access to operators facilities and permit to come in when they only have a client.
“Once you are coming in, you have a dedicated seat and desk for yourself.
Our clients are also allowed to bring in their staff, but we emphasise to them that this is a co-working environment which requires serenity,” he added.
He pointed out that the business environment in the country is not supportive in terms of the basic infrastructure; constant power supply, high taxation, unwillingness of banks to grant loans to fund the business which requires close to N20, 000,000 to start, bad roads, low acceptance culture amongst Nigerians and to some operators it could be security in terms of location.
According to him, the recession in the country has badly impacted on the business as client’s patronage has declined.
“Clients who were supposed to pay for their rents complain of low patronage.
“A strategy for the business is that the more people for us, the merrier. The real secret to the business is to make it as affordable as possible, to drive in more patronage particularly in this type of economy.” He added.
Olanrewaju expressed confidence that the future of the business is bright as his company targets about 8,000 clients in the next five years. He noted that with the call for diversification of the economy, people are realising that the jobs are no longer there and so the need to create the job adding that co-working station which was considered alien, is a good platform to operationalise business idea by Nigerian entrepreneurs and foreign investors.
To the Founder and Chief Executive Officer of Capital Square Workspace Solution Limited, Lekki, Mrs. Modupe Odunyemi the whole model is based on flexibility unlike the culture of rent where you pay annually or for more than a year.
She explained that clients could pay monthly or even daily sometimes.
“People are now seeing the need for flexible model; to rent just what they need and for the time suitable for them. With the recession, some larger companies are scaling down, more people are working remotely and have smaller spaces”, she stated.