According to the FNB Property Broker Survey for the first quarter of 2022, brokers are seeing an increase in demand for retail space to rent.
Retail and office space were the hardest hit by Covid-19 lockdowns in SA. As some of their small retail tenants went under, landlords were forced to offer rental discounts to those who could still pay rent. In many instances, they kept annual rental increases lower - if they effected increases at all.
In the FNB survey, the Retail Property Sector moved sharply in the right direction, showing improvement. In the second and third quarters of 2020, 90% of brokers surveyed indicated an increase in vacancy rates. In the first quarter of 2022, 72.8% said they'd seen a decrease in the vacancy rates.
FNB said this is thanks to the normalisation in economic activity that the sector is experiencing this turnaround for the better.
With most lockdown restrictions gone, more companies are thinking about expansion strategies again, and new businesses have also been formed.
"During 2021, we saw a significant recovery in the economy out of the recession of the 2020 lockdown year, and this appears to be continuing into 2022. The result seems to be a proliferation of new smaller businesses emerging, demanding considerable additional space," wrote FNB in the report.
The bank said that even when asking brokers about their near-term expectations, brokers expect growth in the small business segment, which should continue to boost retail property demand.
However, FNB is cautious about expecting too much from the consumer spending front for now. The bank said even though the FNB-BER Consumer Confidence Index has improved significantly from the extreme low of -33 recorded in the second quarter of 2020, confidence levels are still in the negative territory, which affects expenditure by households.
The index stood at -13 in the first quarter of 2022 and was actually weaker than in the last quarter of 2021 when it stood at -9.
"If one views what a sample of consumers say, it remains a fairly 'downbeat' environment it would appear," wrote FNB.