SiSebenza became the franchise owner of leading global flexible space provider, WeWork in South Africa in March this year. We bought the local operation and now own 100% of the existing operations in South Africa, and are the franchise partner to establish a WeWork presence in Ghana, Kenya, Mauritius, and Nigeria, and expand the South African footprint.
The barriers to entry into Africa for international franchises, particularly in real estate, are formidable, so partnering with a local expert like SiSebenza was invaluable for the WeWork brand. Our decade-plus of experience in building and growing businesses in South Africa and across the continent equips us with an intimate understanding of local dynamics, cultural nuances, and market needs, all essential to create a locally relevant and sustainable operation for any business.
For us, aligning with the world’s global flexible space provider and a dependable and innovative business model has helped us mitigate the risks associated with starting a business from scratch. But in the flexi-office space, where it’s more than just space on offer, WeWork’s substantial investment in technology, design, community development and support, and productivity enhancement has given us the scale we could never have achieved independently. It’s been a matter of plugging in and benefiting from this wealth of resources.
South Africa is one of several WeWork Global franchisors—Central America & The Caribbean are the latest, with other franchisors in India, Japan and China. The Indian business has just opened its 50th building in New Delhi, which is its first foray into that city, and it came just two months after opening three office spaces in Bengaluru.
The co-working environment in India is booming, and we expect much of the same across Africa.
While the Covid pandemic temporarily impacted the shared office space market, the long-term outlook is more than promising. Pre-Covid, flexible office space saw a global average annual growth rate of 23%, making it the fastest-growing commercial real estate market segment. And now, as businesses increasingly acknowledge the benefits of flexible work arrangements and the cost savings associated with traditional office spaces, it’s expected that flexible space will remain a primary growth catalyst for the sector.
Jones Lang LaSalle (JLL), the global real estate services company, reports that in the US, less than 5% of office space inventory is controlled by independent, third-party flexible space providers. With the post-Covid industry shifts, it projects that flexible workspace and shared amenity spaces will grow to approximately 30% of the office market by 2030.
We believe serviced office providers like WeWork currently equate to 1% of the commercial real estate market in South Africa. With the South Africa commercial real estate market expected to grow at a compound annual growth rate of 10.84%, from US$8.68 billion this year to US$14.52 billion by 2028, we expect the proportion of serviced flexi-office spaces, to grow a massive 4% to 6% over this same period. The African market currently sits at less than half a percent, with growth prospects to 2% in the same period.
We are well positioned to capitalise on this growth. When The Link in Rosebank first opened, it achieved 98% occupancy within its first eight weeks of operation – staggering demand for the largest serviced office space in Africa (155 West Street in Sandton is the second largest on the continent). Cape Town Strand Street has, except during Covid, consistently maintained 100% occupancy, which is why we’re expanding to add an additional floor on November 1st to accommodate 250 more members.
The timing couldn’t be better for WeWork in South Africa.
The workplace revolution is here—if employers want their teams back in the office, they have to start offering them something of value to travel to, something attractive that drives collaboration and creativity. Companies are developing robust social strategies to ensure that employees return to and thrive in the office. And the thinking that seems to be working best is to make going to work no different than going to an event. Going to the office is something that people must feel excited about—they must feel welcome and comfortable—and that’s what WeWork does so well.
We don’t just offer bottomless free coffee, for example. We spent months sourcing the best beans and creating our very own South African blend. And it’s not just about the coffee. Our air quality standards ensure that members only breathe the cleanest, freshest air, which has been proven to enhance productivity, we run high-speed internet redundancy, so we’re never down. We’re load-shedding proof. Our members have access to conference rooms and private phone booths. Our large, bright common areas are equipped with fuzzball, and table tennis, and beer (for after-work drinking only), and our members get to seamlessly access all South African locations and the global WeWork network, spanning over 33 countries without having even to use a different Wi-Fi password. All while delivering employers an alternative to the long-term, fixed costs of traditional office space while offering their employees an environment for enhanced engagement and collaboration, a place they want to go to every day.
This story was published in Sunday Times