Green measures and technology are changing the way businesses operate
Sustainability is more important than ever in the property sector, and companies operating in this market will need to undergo a paradigm shift to stay competitive.
This is the advice of William Hughes, business sustainability consultant at Mazars, who says the property market in South Africa is rapidly changing, with a major shift towards green technology and measures and alternative energy.
Other trends include working from home, flexible office leasing and online retail.
When it comes to green technologies, Hughes says more property funds and landlords are taking this into account, and most properties being constructed at the moment have been designed with technologies like solar photovoltaic (PV) generation systems and water capture and recycling systems.
Hughes says landlords have identified the demand for green measures among potential tenants while the trend is now also a priority for owners of older buildings, where introducing green technologies is often accompanied by significant challenges.
But as Hughes points out, greening is only one aspect that South Africa’s property funds must be aware of as business sustainability, especially in the property sector, involves more than reducing a building’s carbon footprint.
“The behaviours and the needs of the people who use commercial properties are changing. This will drastically affect the way in which landlords will generate profits from their buildings over the coming years,” he says.
Traffic patterns are having a significant impact on how commercial properties are utilised, with increasing congestion in major cities influencing the way in which many companies view the time their employees spend in the office.
“The option of working from home is becoming much more attractive for many businesses as some have found they can potentially cut costs by reducing the amount of floor space required to rent. As a result, companies are trying to find better ways to cut down on the amount of time their staff members spend at the office.
“We believe this trend will grow in the future, and landlords may find fewer tenants willing to rent larger spaces.”
Bongiwe Mbunge, senior mnager at Mazars’ Business Sustainability Division, agrees.
She says increasing traffic congestion, coupled with the entry of millennial employees into corporate South African, have persuaded business to adopt innovative ways to maintain productivity and remain relevant.
“Starting the day working from home or at coffee shops to miss the traffic have influenced the way in which business uses office space. More agile office solutions have been on the increase, with a natural decreasing demand for large office blocks as the reduced costs for tenants have been more appealing.”
She says the impact this has on landlords and property developers has presented an opportunity for the creation of collaborative office spaces and an increase in boardroom rents on flexible terms that suit everyone.
“The market is ripe for innovative business models that reduce waste, increase efficiency and rethink the way a changing business sector can utilise space.”
Technology is naturally also causing some major changes, starting with retail space, says Hughes.
“Online retail is growing exponentially in South Africa, and it is no secret the regular retail sector is under strain as a result. Retail spaces are seeing reduced foot traffic and landlords with retail tenants will increasingly see a decline in demand for new retail rental properties.
“Similarly, technology is also driving reduced demand for commercial rental spaces in areas that were in high demand previously.
“Businesses are finding there is less need for them to be close to their client base, driving them towards properties that are more affordable and further removed from major centres.”
However, these trends also present some opportunities for businesses in the property sector, he says.
“As we’ve pointed out, the demand will continue to shift towards properties that are removed from the major centres, so there is an opportunity to capitalise on developing and acquiring properties in areas that would not previously have been considered.”