Decentralised Premium Office Space in Cape Town on the up & up
Cape Town’s economy is rebounding strongly as tourism, semigration, and growing business confidence in the Western Cape bring investors to the Mother City in big numbers. With an economic rising tide lifting all ships, demand for decentralised premium office space in proximity to the city is strongly on the rise.
Decentralised Office Space in areas outside the CBD is the latest commercial property segment to see an increase in demand, in strong contrast to falling numbers in other provinces.
From large corporates looking to locate their satellite offices in close proximity to workers’ residential areas to smaller businesses seeking affordable premises away from the city’s central region, a variety of commercial space tenants are signing leases for decentralised office units.
We expect this trend to accelerate in the high inflation economy where cost cutting has become the norm and hybrid work systems continue to flourish.
Let’s take a look at the latest data to understand the move toward decentralised offices in detail.
In uncertain times, Cape Town provides a safe haven for investors
The South African economy is bracing for challenging times ahead as a combination of factors weigh on GDP output and investor confidence. The fallout from the Covid pandemic, which is being felt especially strongly in the form of rising inflation, is by no means limited to South Africa – but the country is also not immune to it.
- As the cost of living continues to rise, business owners and employees are feeling the pinch, especially in cities where local economies are lagging.
- The ongoing Eskom crisis, now in its 14th year, shows no sign of being resolved with many of the new power stations currently offline having their own technical issues and construction faults.
- As a result, stage four load shedding and above has become the norm in many parts of the country, disrupting business and inconveniencing households yet again.
In Cape Town, these challenges are being felt, but to a lesser degree than in other parts of the country. With independent power production kicking in, the city has managed to avoid high level load shedding and this is expected to continue over the next few years.
Economically speaking, the Western Cape has always attracted its fair share of foreign investment. This is set to continue as overseas buyers return to the property market and invest in the local IT and media industries.
A final ray of hope currently illuminating the Mother City is the phenomenon of semigration, which has seen investors from other provinces make their way to Cape Town to establish businesses, retire, or accompany their adult children as they enrol in some of the excellent universities in and around the city.
Decentralised office space is especially appealing to entrepreneurs who don’t typically feel the need to be in the CBD in order to do business. In fact, areas like Century City, Claremont, Durbanville, Paarden Eiland, and Westlake are becoming the new hot spots for innovative SMEs – many of them bolstered by semigrants to the city.
Taken together, all of these factors point to a brighter future for the city. The increased demand for commercial property that comes with an influx of business investors is especially positive from our perspective.
Commercial property on the rise in Cape Town: what do the numbers say?
Demand for decentralised office space in Cape Town is rising even as other cities see a yearly contraction. Here’s what the latest data reveals about the city’s office space market.
- The office property sector in Cape Town is SA’s top growth market this year. Nominal rentals rose nearly 8% during the third quarter of 2022.
- Nominal rentals for A-grade offices were up 7.6% in Cape Town against 3.8% in Johannesburg and 1% in Durban. Pretoria’s rental market contracted by 3.3%, according to the Rode’s Report for Q3, 2022.
- In terms of decentralised office space, the rental market in Cape Town rose by 1.2% in Q2, 2022, in contrast to a decline of more than 1% in other metros, including Johannesburg.
The Mother City appears to be defying the national trend, with some commentators pointing out that the local economy seems to be on its own trajectory as it becomes less reliant on the SA economy for investment.
According to Colin Anderson, COO of Rabie, Century City is performing exceptionally well, with vacancies around 1% for the second quarter thanks to a ysurge in demand and a slight shortage of premium office space in the area.
The wealth of lifestyle options and the overall safety and convenience of Century City make it a regular favourite among property investors and tenants alike.
Find the perfect decentralised office space with Commercial Space
The CBD has many great things to offer, but semigrants to the Western Cape often prefer to live and work near the beach or a short drive to the countryside or winelands.
A decentralised office space on the outskirts of Cape Town could offer you the relaxed lifestyle you’re looking for with quick access to the CBD, Cape Town International Airport, and other business hubs.
The Commercial Space team is highly experienced in securing premium office space for clients in the Cape Peninsula. If you’re considering a relocation of your offices or company, we’d love to connect with you and help you find the premises that best suit your needs. Contact us today to get started.
