WeWork South Africa is accelerating its expansion plans as the rise in popularity of hybrid work sees a boost in demand for flexible office spaces.
WeWork Inc. filed for bankruptcy this week, however, WeWork South Africa has told TechCabal that it is planning an expansion both within the country and across the continent. The company, which is 100% owned by real estate investment company SiSebenza, holds the exclusive WeWork franchise license for South Africa, Nigeria, Kenya, Ghana, and Mauritius.
WeWork Inc. launched operations in South Africa in 2019, opening three locations across the country. According to Andrew Robinson, founder of SiSebenza, the company offloaded the South Africa operations to SiSebenza on March 1, 2023. The terms of the franchise agreement included SiSebenza opening more locations within South Africa and the aforementioned countries.
“Our operations have been going well over the last eight months. We are reaching record occupancies in our three locations in South Africa,” Robinson told TechCabal. “This month, we are expanding our Cape Town operation by a further 250 desks.“
WeWork SA’s expansion drive
Robinson further added that WeWork South Africa’s expansion drive was motivated by the wave of returning to the office following the remote work epoch driven by COVID-19 lockdowns. Another factor was the emergence of hybrid work which has boosted the demand for flexible office spaces. “To service this demand, we are currently doing due diligence on several pieces of real estate throughout South Africa. We have also started to develop our roadmap into Africa and we are very excited about that,” added Robinson.
Additionally, the pan-African expansion will be spearheaded by South African companies looking to enter the markets in which WeWork South Africa has franchise rights in. “Our growth in South Africa and into the continent is going to be fueled by our current members in South Africa who are looking to open up their operations in places like Lagos and Nairobi. And for us, that’s incredibly exciting,” concluded Robinson.
Data real estate analytics firm KnightFrank in their 2022/23 Africa Report [pdf] shows that vacancy rates for office spaces in South Africa reached a 17.9% all-time high in Q1 2022. Flexible work hours as well as the delayed impact of new post-COVID occupational strategies were cited as the main reasons for the plunging vacancy rates. Despite this, KnightFrank expects this trend to stabilise and gradually slow down “in the short to medium term as business confidence returns and more companies return to offices on a full-time basis.”
For WeWork South Africa, the focus is on the flexible office space sector which Robinson estimates makes up only 1% of current commercial real estate in the country and predicts to grow to 2% and 6% in the short and medium terms respectively. The shift towards a hybrid work model is driving the demand for ‘space-as-as-service’, according to some experts, which in turn drives demand for flexible offices.
Ironically, according to the Financial Times, a shift from in-office work to hybrid work, which impacted occupancy rates on the company’s leased properties, was one of the main reasons for WeWork’s fall from grace and eventual bankruptcy. Whether WeWork South Africa, which views a shift to hybrid work as more of an advantage, will escape the same fate remains to be seen.