The outbreak of the deadly coronavirus in Nigeria which has resulted in the lockdown and social distancing being observed in most commercial cities has hit hard on the country’s co-working spaces, turning them into ghost towns with an estimated N300 million revenue loss in just one month.
Unlike traditional offices that require long term rent or lease payment, co-working spaces which mostly operate on short-term leases have had their revenue stream cut short as potential tenants have adopted work from home attitude.
“In obedience to the directive by the government, we have closed down our co-working office space. Our business is time-based. Any time wasted is a loss on our end,” a top executive at Glendale Workplaces in Lekki Phase I said on condition of anonymity.
Co-working is an arrangement in which several workers from different companies share an office space, allowing cost savings and convenience through the use of common infrastructure such as equipment, utilities, and receptionist.
“The COVID-19 pandemic is hugely affecting the co-working space in real-time and a huge way. This would adversely affect the operations of the co-working space business as income rate is now at an all-time low,” John Oamen, Co-Founder of LiveVend.com, a real estate price discovery platform, said noting that they typically pay most of their bills upfront for services such as power, security, internet and cleaning services.
According to a survey by BusinessDay, a co-working space company in Lagos earns an average of N150,000 per private office in a month. If that is multiplied by the average of 40 private offices (excluding the shared offices and board rooms) in some co-working space buildings, it will amount to a monthly income of N6 million.
Checks by BusinessDay shows that Nigeria has over 100 co-working space companies with over 60 percent located in Lagos. If the N6 million is inputted against the number of companies in the industry, the market would have lost nothing less than N300 million in April amid lockdown in some commercial cities of the country.
“There will be a prolonged pause or rather a crawl in demand for co-working spaces. And due to the social distancing rule, they might also have to cut-down their capacity for as long as it takes to find an effective cure or vaccine, Omobola Ayoola, Business Development Manager at a Lagos-based real estate firm, Joe Etoniru & Associates said.
To curtail the spread of the deadly coronavirus, President Muhammadu Buhari recently announced a 14-day extension to a lockdown in Abuja, Lago and Ogun states. “It has become necessary to extend the current restriction of movement that was set to expire later in the day,” the president said.
Meanwhile, Nigeria Governors Forum has given a hint that it is likely there will be a possible extension of the lockdown across states, as confirmed cases in the country have gone above 1,000.
Co-creation Hub, one of Nigeria’s popular co-working spaces announced on March 20, 2020, the suspension of activities in its co-working spaces and hubs until further notice. Two days later, Passion Incubator-owned LeadSpace also announced that its hubs will be closed for co-working as a result of the coronavirus outbreak.
The shared-office market in Nigeria is, however, not the only one that has been affected by the virus outbreak. A survey of over 14,000 co-working spaces in 172 countries worldwide by Coworker, a co-working marketplace website, found that 72percent of spaces have witnessed a significant drop in the number of people working from their space since the outbreak.
While acknowledging the fact that co-working spaces in Nigeria are under lockdown just like other businesses that are not providing essential services, Tunde Balogun, CEO of Rent Small-Small, said the biggest opportunity for co-working space market will open once COVID-19 is over.
“While organizations shut down their offices, a need for people to meet and work together will still exist, and a need for the organization to meet clients will exist. This is an opportunity for co-working space operators to grow their market with new customers. They shouldn’t be thinking individual subscription, rather organization or team subscription with affordable packages,” Balogun advised.
ENDURANCE OKAFOR
