As South Africa emerges from a two-month lockdown that has stalled an already struggling economy, gloomy predictions in the commercial property sector aren’t difficult to come by. “Higher vacancies, tenants with liquidity challenges and a widespread sense of uncertainty have become the new normal – but there is also good reason to be optimistic about the future of commercial buildings in the post-COVID world”, says Robbie Morris, Head of Commercial at Commercial Space, Cape Town.
Temporary setbacks may disguise long-term opportunities
With building vacancies above 12% nationwide and a predicted 4.5% contraction in GDP this year, there’s no doubt that the post-lockdown period will be a challenging one. The realities of this situation continue to unfold, and the severity of the coronavirus’s economic effect will only truly be known in June and beyond as trade, growth and unemployment figures become available.
Compounding the economic challenges is the need to do business – and live – in a totally new way in the era of social distancing. This has prompted some analysts to predict the end of workplaces as we know them as they herald the coming of a new era where Zoom meetings and hastily converted home offices replace the shiny office buildings and sleek boardrooms of the past. But the fact remains that these emergency measures are no substitute for the collaborative and professional setting that an office provides for a face to face meeting.
Our business culture will outlive COVID-19
The 1918 Spanish flu pandemic swept across the world just as early skyscrapers were beginning to transform the skyline of New York and other world cities. A century later, the virus has been confined to the history books – but many of the buildings have survived and command ultra-premium rentals. In the long run, the human need for collaboration and a dedicated, professional workspace will remain.
Commercial buildings are designed and purpose-built to meet these needs like no other type of property.
In the short-term
The uncertainty of exactly what the future holds will produce an initial hesitancy in companies to embark on major refits. Instead, we can expect to see a short-term return to work strategy in the way of ‘surgical’ interventions as offices are fitted out with safety and health features. Converting workstations with plastic screens and widely spaced desk arrangements to ensure compliance with the 1,5m social distancing protocols will be the new form of privacy.
The extra space requirements come at a time when some tenants are opting to downsize their premises for financial reasons – but the capping of employees permitted to be present at the next level should help in this regard.
According to Robbie Morris of Commercial Space; “As companies consider the option of continuing to manage a remote workforce, the threat of cybercrime becomes exponentially more real”. One solution to this may be to decentralise operations and maintain several small office hubs instead of one large headquarters – great news for many commercial building owners outside the CBDs of our major cities.
Rentals that meet the needs of a post-lockdown economy
While nobody expects a “business as usual” approach after the lockdown ends, it’s certainly possible to structure a rental agreement to the evolving needs of businesses. The Commercial Space team recently consulted with Currencies Direct – one of our longstanding clients – to modify both their premises and lease agreement to suit their changing needs.
With some rotational restructuring between remote and office-bound staff to effect a staggered workforce, we worked with Director, Graham Barratt to accurately assess their space and facility’s needs, and consulted on the renegotiation of their lease to ensure that they receive value and benefit from affordability. We believe that this experience could be replicated across the commercial property sector, helping tenants to retain professional premises and avoiding a drop in occupancy rates.
Heightened awareness of “Safe Space” could usher in a new type of office
Astute commercial property owners are already adapting to the needs of their tenants in anticipation of the lockdown ending – and office space is set for a quick evolution.
Safe collaboration will require a working environment that provides plenty of interpersonal space, upgraded air filtration systems and even ultraviolet light, and high safety standards that extend to every corner of the office. As people begin to accept that handwashing or sanitisation of the hands is part of the ‘new norm’, hygiene stations placed at the entrance to public spaces and buildings and interspersed throughout the office, could even become a welcome ritual!
The prospect of a COVID cluster forming in the workplace is something that every employer is keen to avoid. Given the virus’s propensity to spread rapidly in closed spaces, offices will need to foster a spread-out working style while eliminating circuitous routes with more direct access from A to B.
Open-plan spaces that encourage free collaboration may temporarily be out of bounds as team members find safe, secluded corners of the office to do their work and collaborate safely while maintaining one to two metres of interpersonal distance.
Shared kitchens, bathrooms, and dining facilities will have to be kept clean and sterile, with many buildings likely to increase their cleaning staff or even request the assistance of specialist companies to keep everything from lift buttons to door handles sterilised as much as possible.
There is life – and business – after lockdown
As South Africans prepare to roll up their sleeves and reboot the economy, going back to the office post-coronavirus and after two months of lockdowns, there’s no doubt that challenging times are ahead. But the day will come when the virus has been contained, and life returns to a new kind of ‘normality’.
That’s when prudent investors will reap the rewards of owning flexible commercial properties that can accommodate a new generation of remote working and collaborative tenants.
The experience of living through a pandemic will undoubtedly have a long-lasting impact on the way we work and our working environment. But there is definitely light at the end of the lockdown tunnel – and by working together, tenants and landlords can reshape their relationships for mutual success.
Commercial Space is a team of commercial property area professionals based in Cape Town. Our accumulated wealth of industry knowledge and customer-focused approach means that we are able to meet the unique property needs of our clients in these ever-changing times. With specialists across the retail, industrial manufacturing and office space sectors, our brokers will guide you in securing an office unit that is affordable, professional and puts health and safety first.
We invite anyone concerned about the future of their physical premises to contact us today to discuss your future strategy and to find out how Commercial Space can help you navigate these new concerns.