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Flexible workspaces to contribute R7.3 billion to local economies in the next decade

Flexible workspaces to contribute R7.3 billion to local economies in the next decade
  • Flexible offices are increasingly located outside of metropolitan locations and this is transforming the make-up of local economies globally
  • By creating jobs in secondary cities and suburban areas and boosting the local economy, an individual location can create R69.4million GVA for its surrounding region

The increasing migration of flexible office spaceand co-working locations to areas outside of major metropolitan cities globally is creating a ‘flex economy’ that could contribute more than R3.8 trillion to global local economies in the next decade, according to the first comprehensive socio-economic study of second-city and suburban workspaces. It also revealed that in South Africa, on average 265 new jobs are created in communities that contain a flexible workspace, with an extra R30.8 million per workspace going directly into the local economy.

The analysis, commissioned by Regus and conducted by independent economists, studied 19 key countries to delve into the economic and social impact of flexible workspaces in secondary and tertiary cities and suburban areas both now and through to 2029.

This rise in local working is being largely driven by big companies adopting flexible working policies; moving away from relying on a single, central HQ and increasingly basing employees outside of the major metropolitan hubs in flex spaces. Most are doing so to improve employee wellbeing by allowing their people to work closer to home, and also to save money and boost productivity.

An individual flexible workspace or coworking centrein a suburban location can benefit the local economy in numerous ways, from creating jobs both inside and outside the centre, stimulating businesses and services in the nearby area, improving productivity and opening new working opportunities for those who live locally.

Jobs creation and the ‘sandwich economy’

Across the 19 countries analysed, the average individual workspace sustains 218 jobs. This includes temporary jobs created during the fitting-out stage of the office space, permanent jobs to run the office, including reception, maintenance, cleaning etc., plus the jobs associated with the occupancy of the workspace.

In some countries, office spaces host more jobs due to a variance in their average size, as well as local regulations and cultural factors. For example,office workers in Germany are particularly resistant to higher office desk densities.Japan, on the other hand, sees the most jobs hosted from a single centre at 274, with South Africa coming in somewhere midway at 183.

The research also reveals that on average,82 net additional jobs would be created in the South African local economy for each individual centre.This is because the presence of businesses and their employees provide stimulation to the nearby area. When businesses set up in suburban locations, they bring with them local goods and services, and employees who will spend in the local area, creating a ‘sandwich economy.’

Economic impact

As well as direct job creation, flexible workspaces benefit the local area through an uplift in Gross Value Added (GVA), the measure of the value of goods and services produced in an area. The study found that an average flexible workspace will generate R69.41 million GVA each year, of which R30.81million will go directly into the local economy. This is in part explained by the sandwich economy, but also created by improved career and earning prospects for residents and companies within the centre doing more business locally.

The USA was found to create the largest GVA of an individual centre, contributing $18.88 million into the local area. This is in part due to the different cost savings and productivity gains across countries.

For the greater good

Aside from the direct financial impact, local office space has been found to benefit workers and local regions in other, societal ways. This includes reducing the time spent commuting, with access to a local office space expected to save 7,416 hours per year for workers. South Africans working at flexible workspaces were estimated to gain aggregate annual time savingsof 474 days per year, of which 237 days are assumed would be used for personal purposes.

Americans stand to benefit the most, reducing their commuting time by 10,892 hours per year.This has wider benefits as a shorter commute has been shown to reducestress levels, which can increase staff morale and resilience, as well as mental well-being.

Convenient office space has a further societal advantage, by providing working opportunities to people who might otherwise be unable to travel to an office. This could include disabled people, as well as those with caring responsibilities. As the labour markets tighten, local flexible workspaces could open new routes to top talent.

The next 10 years

As well as assessing the impact of individual centres, Regus also looked at the estimated potential of each market to host a larger, national portfolio of local flexible workspaces. It forecast potential changes over the next decade, reflecting expected trends in workforce demography, technological change and changes in business practices.

This additional analysis predicts that, if current trends towards regional flexible working continues, these communities could see more than three million jobs created by 2029. That’s the equivalent to a city the size of Buenos Aries. 64 000 of those jobs are South African. The forecast also predicts that R3.8 trillion GVA will be added to local economies, enough to build 360 state-of-the-art hospitals[1]. The South African equivalent could inject at least R7.338 billion into local economies across the country.

Steve Lucas of Development Economics, and report author, said, “This study reveals a shift in jobs and capital-growth moving outside of city centres, where it has been focused for the last few decades, into suburban locations. This can benefit businesses and people, from improving productivity and innovation, to reducing commuting time, which leads to improved health and wellbeing.”

Mark Dixon, CEO for Regus’ parent company IWG, said: “When people commute into major cities their wallets commute with them. Working locally keeps that spending power closer to home.What this study shows is that providing more opportunities for people to work closer to home can have a tremendous effect,not just on them, but on their local area too.Businesses also recognise the benefits and we are seeing increasing demand from companies of all sizes for flexible space in smaller cities and towns.Larger businesses are opting for a ‘hub and spoke’ real estate model. At the same time, smaller enterprises want to cluster and collaborate, and so choose flexible workspaces to be near other businesses.

“We already have hundreds of centres in these types of locations, some of which have populations as little as ten thousand people and we plan to open many more as this trend continues. Our vision is that, in the near future, there will be a professional workspace available on every corner.”

To download the full report visit www.regus.com/suburban-economic-survey

Downlaod the Infographic here


[1] Based on the cost to build Queen Elizabeth Hospital Birmingham (QEHB) in the UK, which cost £545 million and opened in 2010

 

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