Two months of social and economic standstill ended at the beginning of June 2020, as South Africa’s lockdown eased from Level 4 to Level 3 – and the Western Cape looks primed to recover.
Picking up the pieces
Every business, family and commercial building across South Africa will need to regain its footing after two months of limited movement and business activity, and the state of their finances earlier in the year will play a large role in their recovery.
There’s little doubt that post-lockdown period will be a challenging time The Western Cape has seen excellent occupancy rates in commercial property in recent years, coupled with a healthy investment in new property developments.
- 86.62% of Western Cape tenants were in good standing in the last quarter of 2019 – in contrast to 80.8% in Gauteng and 80.75% in KZN (according to TPN data).
- Occupancy rates have also been performing well, with bad debt write-offs in the office space sector standing at 0.09% against 0.23% and 0.25% in Gauteng and KZN respectively.
- As a percentage of gross income receivable, the Western Cape industrial sector also performed better than the other provinces with the lowest bad debt write-off of 0,13%, as opposed to 0,27% KZN and 0,65% in Gauteng.
When businesses reopen and commercial building owners find themselves counting the cost of the lockdown period, those with the highest occupancy and lowest debt will have the most room to manoeuvre.
The Western Cape is ahead of the pack on both counts – and that may bode for a better recovery.
Rebuilding the economy calls for flexibility
Looking ahead, it’s clear that many businesses will suffer losses as a result of the COVID-19 crisis – and hard times sometimes call for downsizing and restructuring.
Social distancing measures will also require a staggered approach in going back to the office post-coronavirus, along with short-term ‘safe-space’ changes to office layouts that will need to be implemented as soon as possible.
By working cooperatively with landlords, commercial property tenants will be able to negotiate the best possible lease conditions to suit their needs and help keep their businesses afloat in a post-lockdown economy.
According to Robbie Morris, Head of Commercial at Commercial Space, Cape Town; “There is good reason to be optimistic about the future of commercial buildings in the post-COVID world”. If you’re looking to change your premises or rent office space that suits the needs of a mobile enterprise, contact the Commercial Space team today.