Co-working boom brings affordable office rents

BEIRUT, Mar 23, 2013 (The Daily Star - McClatchy-Tribune Information Services via COMTEX) -- In the wake of the 2008 recession, communal offices and "co-working" spaces geared to young, well-educated, cash-poor, creative types have doubled across the globe.

In the Middle East, this marriage of social entrepreneurialism and commercial real estate has birthed a host of commercial clusters, business incubators, and accelerators over the past two years.

In November 2011, a 900-square-meter cooperative office space, The District, opened in Egypt and has since been followed by 302labs, Rasheed22, and the eco-friendly icecairo. MAKE Business Hub, Shelter, and The Pavillion have opened in Dubai, and Amman now hosts two co-working communities for tech startups, Oasis 500 and Zee Launch Pad.

In the past year, at least five different co-working spaces, largely geared to tech startups, have opened in Lebanon alone. They range from strictly for-profit ventures like Solidere's 500-square-meter co-working space, Cloud 5, to private-public partnerships created with the long-term objectives of turning Lebanon into a thriving IT hub and cultivating an entrepreneurial ecosystem, to semi-Marxist collectives for well-meaning, apple-toting, aspiring activists-cum-entrepreneurs, like Lamba Labs and AltCity.

It's too soon to tell whether this trend catering will be commercially viable or whether the socially conscious brand of entrepreneurialism underpinning so many of these ventures will prove sustainable. But, buzz words aside, the rise in co-working spaces has brought some much-needed affordable office rents to Lebanon and the region.

At the 6-month-old Cloud 5 space in Solidere, for $300 per month a worker gets a personal desk, high-speed Internet courtesy of the only fiber-optic cable in Lebanon, and additional practical support to start a business, Solidere General Manager Mounir Douaidy said Friday at an ArabNet panel on the growth of digital clusters in the region. The space, which hosts 50 workstations, is already half full. Current tenants include Wamda, a platform for Arab entrepreneurs; Procomix, a consulting and digital integration service; and Vine Lab, an online music distribution service.

"The idea is really to provide space to startups with modest budgets who want flexibility and competitive pricing," Douaidy said. Most office space in Solidere averages $370 per square meter. "So we provide space in a very flexible ways to individuals who can just come in, plug in their laptops and sit for a month or more. They also have access to incubators, accelerators and accessible mentors." Though Douaidy said Solidere intended to build on the programmatic elements of Cloud 5 and was working on partnerships with academic institutions to teach courses there, he stressed that he had no intention of physically expanding the space or creating a digital cluster.

Panelist Nidal Esses, the founder of Zee Launch Pad in Jordan, falls to the left of the regional co-working space spectrum. Launched three months ago in Amman in collaboration with Orange UK, the 550-square-meter space is occupied by members, rather than renters, who pay between $30 to $425 per month for various packages. Students receive a 50 percent discount.

The lowest rate includes a desk -- though not a permanent one -- printing, coffee and tea, and Internet service. Esses said the model was already covering the cost of operations, even though the space is just 30 percent occupied.

"This model that I'm building is not a model built on making money," he said. "The whole object is to build a community that brings a different pool of talent together to mix. You might have a Web designer, a Web developer, and a graphic designer who can work together on a project. People want a life change so they start working from home. Then they go to a coffee shop. Then they get their private office, which is too expensive. Zee launch pad is the fourth space." Beirut Digital District falls somewhere between Cloud 5 and Zee Launch Pad. The 40,000-square-meter complex in Bashoura was built in collaboration with the Telecommunications Ministry, Berrytech and Zein Real Estate. Part of the complex opened last fall and the rest of the project will be unveiled over the next five years.

The goal is ultimately to create a full digital cluster where established small- and medium-sized enterprises, business incubators, and startups can network and create synergies, explained panelist Mohammad Yassin Rabah, the general manager of ZRE. Berrytech Park has spaces of between 40 and 100 square meters and desks that can be rented for $20 per day -- about twice the monthly rate offered by Cloud 5 -- including Internet access, though Berrytech Park doesn't have a fiber-optic Internet connection yet.

Several audience members who belong to Beirut's most idealistic co-working spaces believe that shared work environments can best foster social entrepreneurship if they are built by the communities themselves, rather than by real estate developers hoping to create a community in order to attract a particular segment of the market.

"One of the things that irked me about the panel was the separation of the terms community and who they are trying to attract," said Raja Oueis of the AltCity workspace in Hamra. "An alternative model that works and connects the people to their own space is that they do or make everything that they use there. It's not always viable, but this brings a community of interdisciplinary people together. So [the panelists] were saying, 'we need the right mix, the right ingredients,' but in fact this happens organically and it's not a recipe you can put together as the owner of co-working space. It's emergent." Lamba Labs has proved the viability of this model. The communal work space has been able to cover its operating costs entirely from donations by members and small, largely symbolic membership fees, according to Mark Farrah. Members can get a key and 24/7 access to the space for a monthly fee of $20.

"We have just one room in an apartment and we have so many workshops that we don't have time to schedule them all," he said. "We make no money off this and we don't take any intellectual property of anything that's made at the space. Cumulative donations from members and donations at workshops are paying our rent. The more you develop the community, the more you do skill-shares, the more you can pay for your rent and your tools." ___ (c)2013 The Daily Star (Beirut, Lebanon) Visit The Daily Star (Beirut, Lebanon) at www.dailystar.com.lb/ Distributed by MCT Information Services

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