The global coworking market has nearly doubled to 40,000 spaces in 2024, experiencing an impressive annual growth rate of over 15% since 2019. Africa, however, represents a small share of this global market, with only 295 coworking spaces in 2022, accounting for 1.5% of the market. Notably, 80% of these spaces have emerged since 2018, indicating a rapid growth in the coworking industry on the continent. Projections for the future are promising, with the coworking market in Africa expected to reach $13.03 billion by 2025 and potentially $40.47 billion by 2030, demonstrating the significant growth potential of coworking spaces in the region.
AfricaWorks, a leading coworking space provider, operates in eight African cities and is set to launch in Johannesburg, further contributing to the growth and transformation of the African coworking landscape. Emerging Real Estate Digest interviewed the CEO and the findings are discussed below.
Source: Emerging Real Estate Digest
In the bustling streets of Nairobi, Lagos, and Johannesburg, a new trend is reshaping the traditional workspace. Coworking spaces are a relatively new phenomenon across Africa, and the emergence mirrors the shift in how professionals globally engage with their work environments.
Coworking Model & Market
Coworking refers to a working arrangement where individuals from different companies share a common office space, reducing costs by sharing services and amenities. These spaces typically offer amenities such as coffee and tea stations, drinking water, and lounging areas, both indoor and outdoor.
Landlords offering coworking options allow tenants to choose their preferred working experience. The most basic and cost-effective option is the hot desk, which is a desk in an open area available on a first-come, first-served basis. Next is the dedicated desk, followed by private offices, which can accommodate from a few individuals to hundreds of employees.
Coworking Market
As of 2022, there were approximately 19,400 coworking spaces worldwide, with over 6,200 in the United States. By 2024, this number has nearly doubled to around 40,000, indicating an annual growth rate exceeding 15%.
In Africa, there were about 295 coworking spaces in 2022, representing a 1.5% market share. Approximately 80% of these spaces have emerged since 2018 according to Worldwide Coworking Statistics.
The global coworking market is projected to reach $13.03 billion by 2025 with a CAGR of 12%. More optimistic estimates predict the market could be worth $40.47 billion by 2030, representing a CAGR of 14.6% from 2023 to 2032.
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Overview of Africa's Coworking Industry
Gregoire Schwebig, the founder and CEO of AfricaWorks, has been instrumental in expanding coworking spaces across Africa since the company's inception in 2019.
AfricaWorks operates in eight cities across the continent: Abidjan (Ivory Coast), Accra (Ghana), Cape Town (South Africa), Dakar (Senegal), Lagos (Nigeria), Lusaka (Zambia), Nairobi (Kenya), and is set to launch in Johannesburg (South Africa) on May 24, 2024. After this launch, AfricaWorks will manage an impressive 20,000 square meters (approximately 217,000 square feet) of coworking space, providing around 3,500 workstations.
AfricaWorks serves over 1,000 corporate clients, with 50% being multinationals like GE, Visa, Mastercard, Spotify, and TikTok. Another 25% of clients are SMEs, such as law firms and service providers, and the remaining 25% are rapidly expanding startups like Flutterwave and MSF Africa.
AfricaWorks may have the broadest offering on the Continent, but it isn't alone.
Nairobi Garage
Nairobi Garage is Africa's largest coworking space, located in Nairobi, Kenya. It offers flexible workspaces and connects businesses to a dynamic community of innovative companies and professionals, significantly contributing to the growth of the coworking ecosystem in Kenya and East Africa.
Workstyle Africa
Workstyle Africa is a well-established coworking and office space provider with a significant presence in Nigeria. It offers beautifully designed spaces, excellent amenities, and a diverse community network to foster business and idea growth.
Wojo Africa
Part of the Accor group, Wojo Africa provides premium coworking spaces across the continent, focusing on supporting innovative companies and entrepreneurs with flexible and inspiring workspaces.
Impact Hub Accra
Located in Accra, Ghana, Impact Hub Accra is part of a global network of collaborative workspaces. It offers a platform for entrepreneurs, creatives, and techies to connect, collaborate, and create impact.
The Venture Spark
Based in Abuja, Nigeria, The Venture Spark provides coworking spaces and support services to entrepreneurs, startups, and small businesses in the region.
BongoHive
A leading innovation and technology hub in Zambia, BongoHive offers coworking spaces, business incubation, and acceleration programs to support the growth of startups and entrepreneurs in the region.
Africa's Coworking Isn't WeWork's
WeWork failed because it treated itself as a tech company and not a brick-and-mortar leaser of space. It spent too much, too quickly, and made too many mistakes along the way. It almost escaped its failures with an IPO in 2019, but after large losses were uncovered in the process the firm's valuation plummeted from $47 billion to less than $10 billion virtually overnight.
An analysis of IWG, the owner of the Regus coworking brand, revealed critical issues at the time of WeWork's attempted IPO. In 2019, WeWork had $47 billion in lease obligations, offset by only $3.4 billion in signed leases with customers. This serious asset and liability mismatch was compounded by WeWork’s liabilities extending for an average of fifteen years, while its customers committed to spaces for an average of only fifteen months.
AfricaWorks v WeWork
Gregoire Schwebig, in his interview with Emerging Real Estate Digest, acknowledged WeWork's offering and achievements but emphasized that a different business model is necessary for success in Africa.
While WeWork aimed to be a tech company first and a real estate company second, AfricaWorks focuses solely on being a brick-and-mortar real estate company. This long-term approach means hypergrowth isn't the goal.
Initially, AfricaWorks secured long-term leases and then subleased portions of the space. This approach required raising capital to secure and fit out the space and posed significant risk due to the mismatch between long-term leases and short-term subleases. Real estate mogul Sam Zell highlighted this issue in a 2019 interview.
Today, Gregoire has adopted a hospitality business model where AfricaWorks doesn't assume lease liabilities. Instead, it manages spaces on behalf of landlords who grant AfricaWorks management contracts to create, manage, and lease divided spaces.
Many prime office buildings in Africa have large floor plates and not enough tenants to occupy an entire floor. Africa has numerous large companies and many small SMEs, but few mid-sized companies that typically occupy 500-1,000 square meter spaces in developed markets. Financing pressures during property development often result in larger floor plates to make the numbers work for bankers and equity investors.
These market dynamics give AfricaWorks favorable unit economics with minimal risk. Landlords are happy to commit to Gregoire, allowing him to solve the problem of utilizing the space. Small companies renting smaller spaces are willing to pay higher-than-market rates to call AfricaWorks home, as the alternative would require capital expenditure on furniture and equipment. They gain flexibility and can adjust their space needs according to market conditions, which are less stable and predictable than in more developed economies.
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