Running a startup is hard work, running a startup in Nairobi is even more difficult. An entrepreneur in Nairobi is often faced with challenges that are more acute in the Kenyan capital than other cities, especially the snaking traffic.
The 2011 IBM Commuter Pain Survey found that Nairobi roads were the world’s fourth-most congested after Mexico City, Shanghai and Shenzhen.
Startups and established fledgling small and mid-size enterprises (SMEs) in the city are faced with crippling traffic, high energy costs and expenses. To survive businesses have had to be more creative and careful with how they spend their capital, which is even more difficult to access due to the tight credit market.
Lowering the cost of business
One area where a new paradigm shift has emerged and is lowering the cost of business in the startup and SMEs space is in the office rental market. Businesses are opting to use space as and when needed through the flexible office space concept which has “ubernized” the property market.
Employees in engineering or agribusinesses are often out in the field or at client sites and hardly at the company offices. Additionally, the increased use of apps, software and faster internet connectivity means that workers can file reports in the field and no longer have to carry paperwork back to the office for manual filing. Which begs the question – if most of your staff are on the field why would you pay for ample office space that is seldom used?
Businesses are realizing that they can save on rent and startup costs such as buying office furniture, providing staff meals, beverages and utility bills by renting space for a few hours in the month, e.g. when a company-wide meeting is being held. Flexible office space is also ideal for employees whose work is seasonal such as auditors, freelancers or companies that have come to the local market to carry out specific tasks.
Freeing up capital
Renting office space on a need-be basis frees up capital for more productive activities and to fuel future growth.
Flexible office spaces are also proving to be a vital tool for talent attraction and retention especially amongst millennials. A 2017 survey by Flexjobs.com found that 69 per cent of millennials will trade in other work package benefits for better workspace.
Nairobi’s chocking traffic coupled with the growing penetration of affordable and fast internet connectivity also makes Kenya’s capital ideal for flexible office spaces. Hours spent on commuting to and from work can be better used working from home.
Reduction of vacancy rates for landlords
Benefits of flexible office spaces are also shared by landlords who can use this model to reduce the ever rising vacancy rates. Nairobi’s office market space is characterized by a glut which is set to continue as more developers add space to the market.
In a perfect world, landlords would prefer to have large and well-oiled corporate tenants signing long leases but disruption is showing us that today’s titans of industry may not be there tomorrow. Nairobi is replete with examples of companies that have either relocated their offices to other regions or have scaled down operations and, in the process, leaving landlords at a loss. The type of tenants that sign long leases are not always guaranteed and to keep vacancy levels low, landlords in turn should be willing to cater for flexible office space users.
Finally it is important to note that today’s startup has the potential to be the next conglomerate. As a startup matures, its office space needs are equally expected to grow which will in turn create opportunities for landlords and tenants to enter into new and permanent arrangements. But until then, the flexible office space should become the norm rather than the exception. This model is proving to offer a win-win solution for both the tenant and the landlord.
