Why you should care
Because one day we may all labor in offices that look like the “incubator” house from Silicon Valley.
When entrepreneurs-in-the-making hit the pavement looking for cash and a place to hang their shingle, many scope out their local central business district. No-brainer, right? But in the city of Harare, businessman Farai Mutambanengwe is one among many who is thinking of setting up shop in an office park — just not the kind you’re used to seeing.
Here in Zimbabwe, where there’s an estimated 2.8 million small- and medium-size enterprise owners, corporate parks are increasingly feeling homey as onetime office dwellers convert regular houses into working spaces and open up for business. The trend really started taking off several months ago, when the country’s economic prospects worsened, and more companies are now seeking cheaper workspace (though snacks stocked in the cupboards are typically extra). Quite a few offices have “mushroomed” in low-density areas “because companies are using them for space,” says Mike Duru, president of the Zimbabwe National Association of Housing Cooperatives. “Companies go there to negotiate [better] prices for their offices.”
For some asset managers and property investment firms, certain office parks are even becoming an appealing investment option.
Other changes in the economy have also been at work here. Low disposable income compounded with rampant cash shortages and a lack of easy liquidity means more small business owners are looking to save where they can. And many of those just starting up can’t afford the high maintenance charges or rents of buildings in the core of a city. The general sentiment from the market for space in Harare’s central business district “is very low for commercial and office space,” warns the Real Estate Institute of Zimbabwe.
The most popular areas, property analysts say, are those located outside of, but still close to, a central business district, including Milton Park, Belvedere and Hillside. For some asset managers and property investment firms, certain office parks are even becoming an appealing investment option. And as occupancy levels continue to drop in central business districts, or CBDs, as some locals call them, that’s creating new growth opportunities in suburban spaces, says Gilbert Gumpo, the general manager of Old Mutual Zimbabwe Property, one of the largest property investment firms in the country. “There is no point in crying over what is happening in the CBD,” Gumpo says.
For countries beyond Zimbabwe, this approach could solve a couple of issues at once. First, unsold homes in an unstable real estate market where folks are no longer able to keep up with their mortgages could become of interest to estate agencies that work with asset managers. They, in turn, rent out the homes to eager startups looking for cheaper rentals. Meanwhile, struggling homeowners can downsize while having a steady rental income — assuming any retrofit work to make room for whatever an office might need doesn’t eat too much into that revenue stream. In parts of Africa, at least, the paperwork to start a business out of a home versus a traditional commercial space is also much faster to complete and easier to process.
Some startup founders have found themselves rooming with families who are renting out their homes but still waiting to get into their own new accommodations.
Of course, some cities in Western countries have long had certain businesses — the odd barbershop, dentist or restaurant, for example — embedded on the main floor of a converted home. Yet the global property consultancy Knight Frank notes in its 2015 “Suburban Office Obsolescence” report that between 14 percent and 22 percent of the suburban office space in the U.S. is obsolete — that’s anywhere from 600 million to 1 billion square feet. The lack of maintenance is the major factor these buildings are less competitive, the report adds, which could arguably be taken care of with lower maintenance costs if more small businesses turned to homes.
But this market shift obviously wouldn’t work for everyone. Some startup founders have found themselves rooming with families who are renting out their homes but still waiting to get into their own new accommodations. And bigger ventures, or those lucky few that find success and quickly scale up, could only take up so much space before they’d be out of living rooms and bedrooms to hold their, erm, meetings. Meanwhile, some experts in Zimbabwe say commercial space is expected to fall in price as building owners try to compete with suburban homes.
Even so, as economic challenges persist throughout the country, this new office park phenomenon is just another sign of how the Zimbabwean people always find a work-around to their problems.