As <a rel="noreferrer noopener" aria-label="SAPOA's Q1 retail report found (opens in a new tab)" href="https://www.blackpepperonline.co.za/posts/sapoa-updates/sapoa-retail-report-june-2020/25309" target="_blank">SAPOA's Q1 retail report found</a>, the effects of the nationwide lockdown due to the Covid-19 pandemic may only be felt in months and even years to come. As was noted in this report, decentralised vacancy rates averaged just over 11% nationally for Grade A and Grade B offices, which is the worst since 2004. This is exacerbated by the fact that the property sector was struggling even before the pandemic hit.

Now, in their recent <a rel="noreferrer noopener" aria-label="Q2 Rode Report (opens in a new tab)" href="https://rode.co.za/rodes-report-on-the-south-african-property-market/" target="_blank">Q2 Rode Report</a> on the South African property market, local property economists Rode &amp; Associates say that the increased trend towards working from home post lockdown means that the property sector faces an even greater threat in the longer term.

Kobus Lamprecht, head of research at Rode  &amp; Associates, notes that companies might reduce their required office space as more employees work from home on a permanent basis, which will inevitably lead to a prolonged oversupplied market. As a knock-on effect, Lamprecht says that companies might have a reduced need for office space as more employees adopt a work from home approach. However, he noted that this trend should be somewhat offset by the fact that more space will be required per employee in the office space itself, as per the government's Covid-19 social distancing guidelines.

With the changing trends towards working from home, it's clear that an already depressed property industry faces even further pressure. As the Covid-19 pandemic progresses and working habits change, landlords and property developers will need to adjust to these changing times by recognising what their tenants need - and finding a way to provide this.

Whether it's a flexible lease agreement, a more creative solution for office layouts, or the ability for smaller tenants to sublease, pre-empting these changing needs will allow the property industry stay agile and adaptable in the months and years to come.

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Working from home is a long term threat for the property market

Covid-19

28 Jul 2020

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Working from home is a long term threat for the property market

Covid-19

28 Jul 2020