Rosebank Workspace Business Plan — Problem, Customer Need and Value Proposition

What occupiers need that conventional leases do not give them, and the value flexible committed space creates.

Section 5 of 29

Problem, Customer Need and Value Proposition

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A 20-seat team taking conventional space in Rosebank commits R14.4m over five years and R2.1m of upfront capital. The same team takes a Meridian suite for R1.7m a year on a 12-month contract with no capital outlay.

4.1 The customer problem, quantified

Consider a professional services firm placing a twenty-person team in Rosebank. Under a conventional lease it requires approximately 200 m² at 10 m² per person. The economics are as follows.

Table 11 Conventional lease versus flexible workspace: 20-seat team in Rosebank, five-year view

	Conventional 5-year lease	Meridian private suite	Difference
Area required	200 m²	180 m² equivalent	–
Base rental, year 1	R600,000	included	–
Operating costs, rates, utilities	R168,000	included	–
Reception, cleaning, security, consumables	R264,000	included	–
Connectivity and backup power	R96,000	included	–
Total year-1 occupancy cost	R1,128,000	R1,704,000	+R576,000
Tenant installation (capital)	R1,600,000	nil	(R1,600,000)
Furniture and equipment (capital)	R480,000	nil	(R480,000)
Five-year committed cost (7.5% escalation)	R6,547,000	R9,706,000	+R3,159,000
Contractual commitment at signature	R6,547,000	R1,704,000	(R4,843,000)
Capital at risk on day one	R2,080,000	R142,000 deposit	(R1,938,000)
Time to occupancy	4–7 months	5–15 business days	–
Exit flexibility	Assignment or subletting only	12-month contract, defined notice	–

Source: Company analysis using current Rosebank asking rentals, typical operating cost recoveries and quoted tenant installation rates. Flexible cost assumes 20 desks at the FY2027 published private suite rate of R7,100 per desk per month.

The flexible option is more expensive in cash terms, 51% more in year one and 48% more over five years. That is the correct comparison and the Company does not obscure it. What the occupier buys with that premium is the removal of R4.8 million of contractual commitment, R1.9 million of day-one capital, and four to seven months of project time. For a team whose mandate might be reviewed in eighteen months, that trade is favourable. For a stable department with a ten-year horizon, it is not, and those occupiers are not the Company’s customers.

4.2 Customer problem to monetisation

Table 12 Customer problem → solution → value → monetisation

Problem	Solution	Value created	How the Company monetises it
Cannot commit to a long lease	Twelve-month suite agreement with defined expansion rights	R4.8m of commitment removed for a 20-seat team	Rate premium of approximately 51% over net rental equivalent
Cannot fund fit-out	Fully fitted, furnished, cabled and powered suite	R2.1m of capital avoided	Amortised into the monthly fee across a 35-month payback
Needs space in weeks, not quarters	Inventory held ready for occupation	Four to seven months of project time	Occupancy carry cost of roughly 13% vacant capacity, funded by the rate
Peaky meeting-room demand	Bookable rooms and event space charged on use	A third of the cost of owning equivalent space	R300 per occupied desk per month, at near-zero marginal cost
Multi-node team placement	One agreement across three Johannesburg centres	Removes three separate leases and three sets of negotiation	Multi-site account premium and materially lower churn
Wants a prestige address without a floor	Registered address, mail handling and lounge access	Credibility at 12% of the cost of a desk	R990 per member per month; R6.2m of FY2031 revenue at negligible marginal cost

4.3 Willingness to pay

The Company’s pricing assumption is that a corporate occupier will pay between 1.4 and 1.7 times the all-in cost of self-provided space for a twelve-month product. The Rosebank private suite rate of R7,100 per desk per month equates to approximately R789 per square metre of occupied area, against an all-in self-provided cost of roughly R470 per square metre in the same node, a multiple of 1.68. This sits at the top of the assumed range and is the plan’s most exposed pricing assumption.

Two factors support it. First, published rates in the node for comparable enclosed product range from R6,400 to R9,200 per desk, so the Company is priced in the middle rather than at the top. Second, 62% of capacity is enclosed private office, which commands a premium over open-plan membership that the segment consistently pays. Nonetheless, Section 22 models a 5% and a 10% rate reduction explicitly, and the 10% case reduces the equity return to 2.0%. Rate is not where the Company should compete.

4.4 Value proposition by segment

Table 13 Differentiated value proposition by customer segment

Segment	Primary need	What the Company offers	Willingness to pay
Professional services (legal, advisory, audit)	Client-facing address and meeting capacity	Rosebank and Sandton suites plus premium boardrooms	High — address is part of the service
Mining, energy and resources advisory	Project-duration space near the client base	Suites on 12–24 month terms matched to mandate length	High — cost is recovered in project fees
Technology and fintech scale-ups	Expansion headroom without dilution of capital	Contractual expansion rights within and across centres	Medium–high — sensitive to burn rate
Multinational country offices	Compliant, secure, brandable presence	Enclosed suite with private branding and independent access control	High — procured against a global standard
Corporate satellite and project teams	Space outside the head-office estate	Waterfall City and Sandton, billed to a project code	Medium — benchmarked internally
Independent professionals and micro-firms	Credibility and occasional space	Virtual office, flexible membership and day offices	Low–medium — highly price-elastic