South Africa’s Real
Office performance peaks, as oversupply of stock slows rental growth and drives vacancies. While E-commerce continues to stimulate demand for warehousing and distribution spaces.
May 12, 2020
Amidst a contracting economy coupled with rising unemployment, office demand has remained surprisingly stable over the last 3-years. This has been largely due to resilient growth in gross fixed capital formation by businesses. Factors such as rising operational costs, improved networking capabilities, and the global outbreak of Covid-19 however, has seen a strong shift in focus by corporates to scale down on traditional office space, opting for satellite and flex space setups. Consequently, trends of slowed rental growth and rising vacancy rates in traditional office spaces are starting to emerge in most markets. In contrast, industrial space remains the strongest asset class, with leading year-on-year capital growth backed by low vacancy rates. Growth in E-commerce will continue to stimulate demand for retail driven warehousing and distribution spaces.