Shopping centres and office space do battle in a world of changes
Shopping malls, on the other hand, are struggling, and the need for office space is dwindling.
This is according to Lightstone, which has analysed retail and commercial data and forecast the current trends in the retail, industrial and office markets.
Even though businesses may experience internal growth and require additional space, Linda Tshabalala, Lightstone’s business development manager for the commercial-public sector, says the current trend indicates office tenants and owners will endeavour to employ working space specialists and encourage mobile offices rather than relocate to bigger office space.
“Another external element that needs to be considered is the global trend of shrinking office sizes. In recent years companies have begun moving away from individual offices and cubicles in favour of a more social work setting. Minimising workspace has also played a part and many property managers and landlords are leasing to a larger number of tenants, each using a smaller space with more employees.”
Medium to small businesses have started leaning towards flexible leases and sub-dividing space to share risk and reduce monthly costs, Tshabalala says.
The trend is also for open-plan offices, says Frank Reardon, Broll divisional director of broking in KZN. “Hot desking”, where employees do not have dedicated desks but rotate with colleagues, creating greater workplace efficiencies, is also gaining popularity.
South Africa is the sixth most “malled’ country in the world. Tshabalala believes this is “alarming” when considering the uncertain economy and contributing factors that need to be considered for a shopping centre or mall to be successful.
“Additional pressure on the consumer’s disposable income shows a decrease in foot traffic in malls, and the individual’s spend. Previously stable retailers have been forced to withdraw from the country, creating more vacancies in centres.”
Lightstone believes this could see developers moving to smaller “strip malls” with less leasable space to fill.
Reardon says the past decade has seen larger regional malls dominate retail sector performance. However, recently there has been a marked shift to convenience and smaller centres that provide easy access with a targeted food offering.
One of the only sectors to show resilience is the industrial zone, with developers continuing to build on risk and being rewarded with favourable uptakes of tenants in spaces such as warehouses.
Tshabalala says the logistics industry seems to be the catalyst for the stability, with new hi-tech warehouses catering specifically for this division.
Reardon agrees the industrial property market will continue to be heavily affected by technological changes.