The Covid-19 pandemic has accelerated an existing trend for flexible workspace and working arrangements, with companies around the world adopting work-from-home policies that are set to become permanent.
With the advent of the flex economy – a decentralised working model that has been catapulted into action during the Covid-19 pandemic – local economies around the world stand to gain as much as R3.8 trillion in value over the coming decade. In the South African context, it is estimated that 265 jobs are created in every community that hosts a flexible workspace – along with an economic boost of over R30 million.
Tangible benefits like these, along with the growing necessity for remote working during the current pandemic and possible future crises, are causing a serious shift in the commercial property sector.
With more employees working from home and companies scaling back on their fixed monthly overheads, it’s easy for commercial property owners to see negatives on the horizon – but there will always be a demand for office space. The challenge right now is to identify and secure the right tenant by adapting office premises for the demands of a post-COVID economy.
Here are some aspects of a successful property rental strategy that are worth bearing in mind as the economy continues its transformation.
The new reality: Quality over quantity
The length and severity of South Africa‘s lockdown has given many businesses pause for thought about how much to spend on office premises each month and what functions they can afford to keep on a work from home basis.
- For many managers and business owners, the result has been a reduction in total floor space with client-facing staff and executives being given priority.
- From a commercial property point of view, this means that tenants are likely to demand higher quality office units of a smaller size while remote workers who happen to be in the area may be a good market for flexible shared office space.
Flexible workspaces are viable investments
As office buildings reopen following the lockdown, the economic reality of a post-pandemic South Africa is starting to sink in.
While some businesses are back in action – with the necessary social distancing measures in place – others have sadly closed for good. As these trends unfold, savvy commercial property owners are taking heed of the reality on the ground and catering for real demand – and real tenants.
- Despite media headlines about a total work-from-home economy taking root during the pandemic, the fact remains that most businesses require a level of collaboration that Zoom meetings alone can’t provide.
- At the same time, many traditional businesses – and their clients – are not likely to embrace a totally remote business model just yet.
- Customers who have enjoyed a face-to-face customer experience on the premises for years are likely to want it again as soon as they feel it’s safe to visit your offices.
The unpredictable nature of COVID outbreaks (and the prospect of another lockdown) means that long-term planning based on fixed rental floor space and a hypothetical occupancy rate may not be feasible for the time being.
Instead, building owners should focus on securing existing tenants – on more affordable terms if necessary – and catering to the evolving needs of businesses in the post-COVID era.
Overcoming the pandemic together
2020 has been a difficult year for commercial property tenants and owners alike – and the best way to overcome the challenges of the pandemic is through cooperation and mutual agreement.
- Industry statistics may offer interesting insights into current property trends, but one of the best ways to judge what your actual tenants need is to ask them.
- Tenants and owners should be communicating on a regular basis – and an experienced estate agent can be extremely valuable in this process.
- If disagreements arise, it’s best to try and resolve them to everyone’s mutual benefit – a pandemic isn’t the ideal time for drawn-out disputes and expensive legal action.
Charting a path forward in the new economy
Smaller premises, flexible workspace contracts, and repurposing dead areas of a building such as reception areas and hotel foyers to meet the needs of constantly evolving commercial tenants may sound daunting – but with the right strategy and a long-term outlook, it’s more than possible to weather the COVID storm.
Whether you’re keen to repurpose or renovate your building or would like to secure the ideal type and number of tenants going forward, the Commercial Space team is ready to assist you.
Our team of area experts has decades of collective experience in the Cape Town commercial property market. Contact us today to set up a meeting or tell us more about your specific requirements.