Move to ‘home, work and play’ model to save SA Commercial Property sector disrupted by Covid-19 pandemic
MAIN IMAGE: Professor Viruly, Property Economist and Professor in Property Economics, Property Investment and Property Finance at the University of Cape Town
Professor Francois Viruly
The South African commercial property market has suffered a significant knock since businesses made the transition to working from home following the implementation of lockdown in March 2020. According to the South African Property Association (SAPOA) there are some 2.4 million A (elite office spaces in prime city locations) and B (quality affordable) grade vacant office spaces in South Africa, which is putting strain on the sector.
And while there was some recovery in between the first and second waves of the virus, with many office workers splitting their time between days in and out of the office, the severity of the third wave and the slow-moving progress of the national vaccine rollout have put the brakes on a swifter move back into commercial buildings.
But it’s not all doom and gloom for the market. Players in the commercial property sector are beginning to take serious note of the shifting needs of investors and the growing work trends accelerated by the pandemic. Key among these is the increased merging of residential and office with retail space, as employees look for more opportunities to work closer to home rather than at home.
We are moving towards a combination of ‘home, work and play’. The location of the desired office space will change to a degree in future with increased talk of new opportunities in suburbs. Leaders in the commercial and residential property space will need to focus on providing a service instead of merely focusing on the sale or renting of square metres. The tenant will want to acquire a service that provides for the needs of their business and employees. Similarly, the post-Covid era will result in more questions being asked about the way that work is organised, so the commercial property sector is having to take a closer look at how space is used and new requirements.
The big term in the property sector at present is the ‘repurposing of space’. Owners will come under increased pressure to look at the space they own and ensure this is reflective of market trends.
There will be a continued demand for space, but it is important to ascertain the type of space that will be demanded. Work practices will change, and the property sector will need to adapt to these changes.
A critical factor influencing office space of the future is the focus on employee wellbeing. There is a relationship between the two and this will result in the “de-densification” of office space to provide more square meterage per employee. It’s becoming much more important that the health and safety of office workers is considered when configuring a space.
The commercial property market was not entirely blindsided by the shift in thinking and service offering by the time the pandemic arrived in the country. This fact makes for a hopeful scenario for the industry. Certain trends were already evident prior to Covid-19 and lockdown. For instance, the move towards co-working spaces, green buildings, and a focus on locations with good transport access were already there. Covid accelerated these trends already under consideration.
Can a more robust vaccination rollout encourage employees to go back into the office? Flexibility will probably remain with employers adopting a hybrid model. While some corporates may well take a view that those who have been vaccinated should come back to the office, others may adopt a blended model requiring staff to be at the office a number of days a week, because not all work functions can take place efficiently and productively – if at all – from home.
- Professor Viruly is Property Economist and Professor in Property Economics, Property Investment and Property Finance at the University of Cape Town