The cost of renting retail space in Commercial Property Cape Town has remained stubbornly high even as SA’s economic growth remains low – and this has caused many retailers to explore online sales as a cost-effective alternative.
Inspired by global success stories like Amazon and Alibaba, South African retailers are seeking to tap into a lucrative new online market.
Will this new trend see more retailers shy away from traditional retail space? Here’s what’s happening in the commercial property sector right now.
Rising costs – and many that can’t be helped
It may seem strange that retail space has remained expensive even in a period of relatively slow growth for the SA economy.
The answer to this financial riddle is that many of the costs involved in renting a retail space are beyond both the tenant and the owner’s control.
The past decade has seen large jumps in municipal rates and taxes and utilities in virtually every South African metro – and Cape Town is no exception.
- Rates and taxes have increased by 133% on average since 2008, while the cost of electricity has skyrocketed due to the Eskom crisis.
- These rising costs have been far higher than inflation and now account for an average of 24.7% of total operating costs for SA businesses.
- While buildings can invest in power- and water-saving technologies, the per-unit cost of water and electricity continue to rise.
- Additionally, there’s virtually nothing that building owners and tenants can do to reduce municipal rates and taxes.
Could a hybrid sales strategy be the best solution for retailers?
If you’re keen on renting retail space but are worried about rising costs, the best solution may be to rent a small retail space and warehouse facility and focus on growing your online sales through eCommerce.
This hybrid approach would give you the best of both worlds. With a physical presence to showcase your products for customers who prefer a “look, see and feel” approach to shopping and an eCommerce website that will let you reach buyers around the world.
If you’d like to view some of Cape Town’s most sought-after retail spaces, contact us today. The Commercial Space team is ready and waiting to assist you.