Hot Desks & Cold Leases: The Rise of Co-working Spaces
2 Min Read
Walk into any half-decent coffee shop in Sandton, Rosebank, or Seapoint on a Tuesday morning and you'll find the same scene: MacBooks open, Zoom calls on AirPods, a founder pitching a client two tables away.
But coffee shops were never built for this, and a growing share of freelancers, solopreneurs, and small teams have figured that out. They're moving into co-working spaces instead, and the numbers behind that shift say something bigger about how work is changing shape.
Fun fact: The New York Stock Exchange's opening and closing bells weren't always bells. Before 1903, they used a Chinese gong. The gong got swapped for a brass bell when the NYSE moved to its current Broad Street building, and those bells are now rung by guest celebrities, CEOs, and the occasional cartoon character (Mickey Mouse has done it).
What Are Co-Working Spaces?
A co-working space is a shared, serviced workspace you rent by the day, month, or seat, rather than locking yourself into a 5-year lease for a floor you don't need. You get a desk, fast fibre, meeting rooms, backup power (non-negotiable down here in South Africa), a kitchen, and a receptionist who isn't on your payroll.
The bigger operators like Workshop17, Regus, Spaces, WeWork, Cube, and Venture Workspace throw in private offices for small teams, 24-hour access, and networking events designed to make you bump into people who might become clients, collaborators, or hires.
And it's no longer a niche. Globally there are now around 42,000 co-working locations, up from roughly 160 in 2008, with the industry worth about US$21 billion in 2025 and housing 5.5 million members daily. South Africa's growth rate has reportedly run at around 44%, double the global pace, with operators like Workshop17 expanding aggressively across SA and into Mauritius. The quiet shift from "nice idea for freelancers" to "serious slice of commercial real estate" has already happened. Most of us just haven't looked up from our laptops to notice.
The Rise Of The Solopreneur
Over the last 5-10 years, I think we’ve seen a surge in solopreneurs, freelancers and one man teams, which in part probably somewhat correlated with the increase in retrenchments as well as work-from-homes during and following COVID.
When the first co-working spaces launched, the US workforce consisted of roughly 10% freelancers & solopreneurs, while nowadays that number is closer to 40%.
So whether this was the cause for the market adapting to an increase in co-working spaces, or simply a lucky coincidence (or both), it’s worked out well in terms of supply and demand for these spaces.
AI Is Changing What “A Business” Looks Like
With the rise of AI tools and systems, we’re seeing that a business no longer needs an entire 40 person team to really take off.
Instead, the rise of solo founders and one person businesses has doubled over the past decade, with 36% of startups on Carta being led by single founders.
In many cases, an entire solopreneur tech stack costs $3 000-$12 000 a year - much cheaper than hiring the equivalent.
As these teams grow, they often stay at a sub 10 person headcount, and no one is going to rent an entire office floor for 10 people… instead the simple answer is to look at a co-working space.
When you're running a two-person business with an AI stack doing the work of ten, the thing you've actually removed from your day is colleagues. No water-cooler chat, no one to bounce ideas off, no accidental introduction to the marketing lead who knows a guy. Co-working spaces sell that back to you.
Most operators run regular networking events, member mixers, founder breakfasts, and industry meetups, plus the ad-hoc services you'd normally need to outsource: meeting rooms for client pitches, reception for deliveries, printing, even podcast studios at some of the bigger sites.
And many times, the people you meet in these spaces are other founding teams and like-minded individuals, making it a good place to find possible clients, partners, investors and the like.
Some Quick Accounting Points
1. IFRS 16 stays off your balance sheet. A 5-year lease gets capitalised: right-of-use asset, lease liability, depreciation, the lot. A month-to-month co-working membership usually sits outside IFRS 16 as a plain operating expense. Cleaner balance sheet when you go looking for funding.
2. Fixed costs become variable costs. Co-working swaps a fixed commitment (lease, fit-out, furniture) for a cost that flexes with headcount. Lower operating leverage, lower break-even, less downside if things slow down.
3. Clean tax deduction, no home office admin. A co-working fee is fully deductible under section 11(a). No apportioning floor space, no section 23(b) arguments with SARS about your spare bedroom, no year-end awkwardness.
Roundup
Founders with AI stacks, lean teams, and no appetite for 5-year leases needed somewhere that matched how they actually worked, and co-working was already doing exactly that.
For aspiring CA(SA)s, the takeaway is simple. A growing slice of the businesses you'll audit, advise, or work for will never sign a traditional lease, so it's worth paying attention to where business is actually being done these days.
Until next week,
The Journal Entry Team
If you enjoy our content we’d love it if you showed your friends and peers!
Please copy and paste this link to others:
