Virtual offices putting small businesses in prime addresses

An impression of The Watermark, a business park coming up in Karen, Nairobi.

With Britam Towers open to potential clients, being the tallest building in the region and second in Africa, top corporate clients will be jostling for space in the 32-storey building for brand visibility.

However, small start-ups who might not be able to foot the bills that come with setting up a new office in such high end buildings due to the high cost of office amenities and other installations might not make it onto the list of tenants.

While some would happily pay top dollar for office space in such a prime property, there are those who can’t afford to, are not willing to, or it doesn’t make business sense to their business to work from here full time. And they too have their place. In comes the flexible workspace concept.

Regus have said that they will be setting up shop at Britam Towers.

Regus offers fully serviced office spaces, virtual offices and co-working spaces.

Flexible model

Its virtual office model offers a home to start-ups who have little financial muscle to rent out a grade ‘A ‘office space and those in need of a brief office space, maybe for hours.

“In three months’ time, we will be opening our new space for letting in the newly unveiled Britam towers,” Heidi Duvenage, Regus East and Southern Africa sales director tells Home & Away.

Other companies offering the virtual office model include Coworker, Twig co-working space, and the Mint Hub.

This model, which is commonly referred to as the virtual office segment, offers a client’s office amenities including furniture, Internet connectivity, phones, utility bills and a staffed reception.

“You only need to pay separately for consumables, such as coffee, copies and calls. All other services are provided for,” Duvenage says. Businesses seeking prime addresses grappling with top-shelf prices is not new.

Meet Job Mutai, Managing Director, Newage Media Agency, who says that due to high rent prices in buildings offering grade ‘A’ offices in places like Upper Hill, Westlands and Nairobi’s CBD,  many potential tenants stay away.

He says before he opened up his office in the CBD, he used to work from home.

The commercial office spaces that he desired to move into were too expensive for him in spite of the large brand visibility that he looked up to and are available in these buildings.But this phenomenon is not just here.

For instance, when Dubai’s Burji Khalifa opened its 828m-high tower in the heart of Dubai, which had pretty 900 luxury apartments and 37 floors of office suites, the world’s tallest building had the same problem.

Jones Lang LaSalle, a property market consultant said that it sold it office spaces in the boom years to top corporate clients well before the building was completed. About two thirds of the offices had been taken up.

Burj Khalifa

In a span of two years, Jones Lang LaSalle says that in the Burj Khalifa, the prices were quite unbearable for the big corporates in spite of the fact that the tower was a well-publicised property.

“The tower opened for business in 2010, by 2012 only 10 per cent of the 37 office suites had clients. All the big companies bolted out silently due to high rental charges which was increasing by 10 per cent annually.”

Duvenage argues that the virtual office model availability in the market is set to further leverage on the market prices since it is cheaper compared to the conventional methods of letting out space.

“We have a total of 10 locations in Kenya where in the 11 years we have been around, we have served over 1,000 companies some on short term basis and others on long term contracts that run more than six months,” Duvenage says. Regus is present in more than 100 countries.

According to Duvenage, Regus, who are currently the market leaders in the virtual office market segment in the world with a presence in more than 100 countries have opened a total of 10 centres in Nairobi in the last 11 years that they have been in the market.

They charge between Sh20,000 to Sh55, 000 per work station per month for a nine-square foot space depending on location.

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