Commercial Space Market Trends 2023

The commercial property landscape keeps shifting, and savvy building owners as well as tenants are keeping a keen eye on the near future as they plan their strategies.

At a time when the load shedding and power supply crisis is reaching its peak, digital transformation, and AI disruption are just around the corner, and the sharp increase in interest rates seem to be at an end, what can the commercial property sector look forward to in the months and years ahead?

Can work from home survive power cuts?

Load shedding as a permanent part of daily life instead of a temporary inconvenience is the new reality facing South Africa. Commercial office space may benefit from this development as companies begin to pressurise employees to return to the office where power supply can be guaranteed.

We expect to see an uptick in enquiries for larger commercial office spaces that can accommodate teams on a 9 to 5, Monday to Friday basis, with competition for premium yet competitively priced commercial properties intensifying in the months to come.

Commercial buildings become mini power generators

In addition to securing reliable power for their own operations, Cape Town commercial buildings will be able to sell their surplus energy back to the city profitably. This will create an incentive for green buildings with solar installations across the peninsula.

Looking to the future, once the Eskom situation is resolved, and reliable electricity becomes widespread, some companies may choose to experiment with a hybrid working model again. But for the short term, it’s set to be business as usual, pre-pandemic style.

High interest rates set to peak

The past five years have been a veritable roller coaster where interest rates are concerned.

After the reserve bank slashed the repo rate substantially during the pandemic, it changed course over the past year in order to curb inflation.
The commercial property market has responded flexibly to these unprecedented rate movements, while many economists believe that the cycle of rate increases has reached its peak.

While we are unlikely to see record low interest rates like those seen in 2020, a combination of increased demand from tenants and more affordable financing could persuade many developers to go forward with projects that have been on hold.

Stable or lower rates could stimulate construction activity despite an increase in construction materials and other inputs as a result of the global supply chain challenges that all countries are facing at present.

Overall, we believe that this trend is good news for the commercial space property sector, with a positive cycle of increased demand and affordable financing giving investors the room they need to create more fantastic office and light industrial development across the city.

Virtual Viewings: The new normal

The logistics of organising a property viewing have never been straightforward, and if you’ve ever had to cancel a showing at the last minute or arrived at the premises without your phone and Google Maps or been stuck in rush hour, traffic, you’ll know just why so many clients opt for initial virtual viewings.

Virtual viewings, which gained traction and popularity during the pandemic, are an example of an excellent tech solution that increases the efficiency of every commercial property transaction.
Agents and prospective tenants can either view the property live or using pre-recorded video that highlights the unique offering of each premises
Virtual viewings give tenants, particularly semigrants, a good idea of whether they’d like to visit the property in person to confirm the transaction or keep looking for a better fit.

We expect virtual viewings to continue and even gain popularity going forward, especially given the time constraints clients have to work with and the sheer convenience of being able to view properties from the comfort of their home or office.

AI: making agents more efficient for superior client service

Artificial intelligence has been all over the news recently with the release of ChatGPT, a language generating program that can mimic human writing to an eerie extent.

The commercial property market, especially in mature markets like the US, is making extensive use of AI to improve the efficiency of transactions, generate leads, and connect agents and suitable properties with tenants more effectively.

Computer programs can compare tenant requirements with listed properties at a level that goes way beyond floor, space and amenities.
Chat bots can assist agents by replying to queries, placing orders for building management-related supplies, and speeding up communications in general.

Some commentators may be concerned about the impact of AI on the future of employment, but here at Commercial Space we are confident that these new advances will simply serve as enhanced tools for competent and dedicated agents to better serve their clients.

Embracing new technologies, and staying ahead of the curve is an essential element of customer service, and we are open to any advances that help our team deliver the best commercial properties to prospective tenants most efficiently.

Semigration brings huge investment to the Western Cape

As the political and business climate in some provinces show few signs of short term improvement, the Western Cape stands out as a stable and prosperous region. That reputation is attracting new residents from other provinces on an annual basis.

In addition to semigrants from other parts of South Africa, investors from around the world are starting to return to the Mother City as pandemic- era travel restrictions become a thing of the past.

Semigration to the Western Cape resulted in the province approving a higher value of building plans than Gauteng – R35 billion against R32.25 billion – and this trend shows few signs of slowing.
High income individuals are increasingly selling their homes in Gauteng to relocate, bringing a wave of potential investors and not just employment seekers into the province.

This is exciting news for the commercial property sector as we anticipate a surge in new businesses in the medium term.

This renewed interest in Cape Town, both as a travel and business destination, is bound to have a positive effect on demand for commercial property. We see this as extremely positive and a very lucrative opportunity going forward.

Find your on-trend commercial space with us.

Overall, the new trends shaping the future of commercial property in Cape Town look extremely good – and if you’re keen to join this thriving business hub, your first priority should be securing a desirable commercial property in a market with high demand.

The commercial space team has been assisting clients in the Mother City for decades to find the ideal commercial office space that meets the needs of their growing businesses.