Commercial property

Emerging opportunities in commercial real estate post-lockdown

The commercial property market in South Africa remains a more reliable form of investment with capital growth over time, according to Franz Gmeiner, CEO of Orion Real Estate.

All industries and businesses have been impacted in some way by the Covid-19 pandemic, including how their commercial properties are used.

The rise of remote working, the rise of online shopping and increased environmental awareness have all influenced the commercial real estate market, providing many challenges and opportunities. As we enter the new post-pandemic era, which accelerates developments towards the fourth industrial revolution, commercial properties will remain good assets to invest in.

According to the latest Global Commercial Property Monitor (GCPM), sentiment improved in the final quarter of last year among professionals working in the global commercial property sector, returning to positive territory for the first time since the start. of the pandemic (-28 in Q1 2020 to +01 in Q4 2021).

Optimistic about opportunities in South Africa’s commercial real estate market, Franz Gmeiner, CEO of Orion Real Estate, says that given the country’s tough economic conditions, relative to high-risk stocks and shares, l Commercial real estate remains a more reliable form of investment with capital growth over time, especially with certain sectors such as industry and offices.

The key is to stay focused on the long-term future and be versatile.

Gmeiner notes how the following trends will affect the national real estate market in 2022. The:

· Partial return to the office as the pandemic subsides.
· Exponential rise of online retail.
· Repurposing commercial properties to meet growing demand for warehousing and residential.
Concerns about environmentally sensitive properties

Trade office far from dead

As companies take a hybrid approach to remote working and adjusted lockdown regulations spur the return to the office, commercial office space is far from a relic of a bygone era. Many businesses are rearranging their spaces or have added new equipment to accommodate new workplace norms.

“It became clear that the sales office has a role to play in team meetings and other collaborative efforts. The market tells us that while many people will continue to work from home, office space is also useful for colleagues to interact and enhance teamwork, innovation as well as productivity,” says Gmeiner.

However, Gmeiner predicts that offices will now be smaller, with social distancing in place. “Hot desk-like services and systems that allow workers to reserve a desk for a day will also play an increasingly vital role in commercial properties of the future.”

Repurposing commercial buildings

Another trend that will impact the commercial and industrial real estate sector in 2022, which had already gained momentum in recent years, is the repurposing of commercial real estate into warehouse space and distribution centers. of the last mile to respond to the booming online shopping market.

A functionally outdated building can easily be repurposed into a productive and profitable space,” Gmeiner said. However, he warned that there was a desperate need for the government to intervene in some regions that were facing a climate of disintegrating infrastructure that was not conducive for business.

Focus on sustainability

South Africa’s commercial and industrial property sector is rapidly increasing its green building credentials.

Local real estate companies have noted an increase in demand for more environmentally sustainable commercial and industrial properties.
In April 2021, the results of the MSCI South Africa Green Annual Property Index reinforced the association between quality buildings and certified green buildings, as evidenced by higher capital value per square meter, capital growth more resilient and a higher net operating profit per square meter compared to non-certified office buildings.

“There is definitely a business case for renting and buying properties with green features. Extensive research has repeatedly shown that companies that are proactive in environmental sustainability tend to achieve higher financial returns. There are also, for example, the daily financial savings on the cost of energy, thanks to the use of more profitable renewable energies. he commented

Importance of operational infrastructure

A concern for Gmeiner is the infrastructure of our country “Currently we are seeing in KwaZulu-Natal, Gauteng, the North West and the Free State in particular that poorly performing municipalities and provincial governments are not responding requirements for road maintenance and provision of water services. This has a negative impact on businesses in the region, which then seek greener pastures in other provinces and close shop, resulting in job losses.

Municipalities need to find ways to work with businesses to ensure that infrastructure is properly maintained not only to attract new businesses and new real estate developments, but also to retain existing commercial and industrial businesses,” he said. he declares.

Gmeiner concludes that commercial property and development only works if the right infrastructure supports it. “As the crucial element that connects businesses to their markets and employees to their jobs, adequate infrastructure is a key driver of economic growth.”