Commercial property owners need to rethink office space, say experts
Commercial property owners facing rising office vacancy levels must get creative to attract and retain tenants.
To do this Broll divisional director Frank Reardon says they need to embrace the future of office space which is all about the advancement of technology adoption, connectivity and the desire for more collaborative and flexible environments.
As at the last quarter of 2018, the national office vacancy rate, according to the SA Property Owners Association, was 11.1%.
The highest rate among the metros was eThekwini at 13.2%, followed by Joburg (12.3%), Nelson Mandela Bay (11.2%), Tshwane (8.9%) and Cape Town (7.8%). Sapoa’s Q4 December office vacancy report states: “Capital investment into financial and business services, while still positive, has dipped to just above zero, which slightly raised the probability of another short-term deterioration in the vacancy rate.
“Given the trend of economic growth and structural growth constraints it is becoming hard to imagine the national office vacancy rate returning to mid-single digits within the next three years.”
Commercial property owners, therefore, need to think out of the box. Globally, Reardon says there is a “big drive” to optimise workspaces, and landlords should take note of the remote working and shared/ flexible office space trends.
Adapting current space to suit these working styles will go a long way to keeping tenants and attracting new ones. “Even within the same company, dividing office space into separate ‘boxes’ allows people from different units to work together, thereby enhancing collaboration.
A flexible workspace design which allows individuals or smaller companies to work in the same space is also growing in popularity. “Many landlords are leasing their offices to flexible workspace service providers while some have tried to go it alone by dividing vacant space into workable individual offices, putting in a few boardrooms, and creating shared services, including IT, kitchens, and a reception area with a receptionist.”
Although landlords can operate these spaces themselves, Reardon says most will opt to let them service providers who have the marketing channels and expertise to run these environments effectively.
Paragon Lending Solutions chief executive Gary Palmer says one of the company’s “proactive” clients actively designed and marketed his properties to create communities of like-minded businesses and people.
“By designing spaces which appeal to certain sectors, like the creative or tech companies, (one client) has built hubs which offer far more than just a space to set up desks. This makes them less likely to leave and helps him avoid the pain of searching for new tenants.”
Other measures Reardon says property owners can take include keeping their rents competitive, implementing green measures to reduce operating costs and ensuring that their space has quality connectivity. “If there is a fibre connectivity 150m away, for example, that would be an obvious one.”
He adds competitive tenant installations and making buildings more attractive will also help keep offices tenanted. “You would be surprised at how many offices still do not have space to have a decent coffee… Create a space for people to relax and have a coffee.”
Ultimately, he says, reducing vacancy levels down boils down to balancing the things close to tenants’ hearts: location, convenience, cost, aesthetics and sustainability.