Larger office properties appear to have a greater chance of being fully let, statistics have indicated.
In the first quarter of this year, 65% of office properties were fully let, according to Sapoa’s latest office report.
The remaining 35% were partially let with only 3.5% empty. The average fully let office had a GLA of 5 100m², while the average empty office was 19% smaller at 4 100m². Across all office grades, the buildings that were empty were, on average, smaller than those occupied.
The proportion of empty offices was also higher among secondary offices with 4.4% of B- and C-grade empty. Still, given the uncertainty associated with the Covid-19 pandemic, coupled with economic headwinds and structural growth constraints such as load shedding, Sapoa says it is difficult to predict what a “new normal” will look like for the office sector.
“A protracted period of market turmoil with increasing vacancy appears likely and could catalyse a structural shift where market participants are forced to reconsider the role of office property. More companies might choose to shift a portion of their workforce to remote and/or flexible workspaces in an effort to cut the overheads which are associated with maintaining a physical office location.
“Apart from the vacancy rate, the quantum of office space available has become an increasingly relevant measure and provides valuable context. “While the current ‘total vacancy rate’ (including unlet developments) is average in a historic context, the amount of space available is the highest it has ever been.”