Major changes impacting commercial property sector


Cape Town - The commercial property market has undergone some great changes in the past, and there could be major changes in the pipeline due to constant technological advancements, says Leon Breytenbach, national manager of the Rawson Property Group’s commercial division.

As online shopping drastically increased in popularity, customers expect faster execution of their orders, even same day delivery in many instances.

Some retail properties may look to evolve to dual functioning entities which receive consumers in person as well as managing on-line orders and deliveries. This may, in some cases, require a smaller visible retail presence, but increase the need for more localised warehousing in order to speed up the delivery process.

“Owners of suitable industrial spaces may potentially benefit as they redesign their properties to facilitate this new market,” Breytenbach suggests.

While there’s no crystal ball that gives us certainty regarding the economy, one thing I can say through experience is that as an investment, bricks and mortar has always held its own over time – and arguably better than many other businesses, says Norman Raad, CEO of Broll Auctions and Sales.

“Buyers have been sitting on their hands or looking to invest offshore, or just hold foreign currency as our country’s economy continues to report increased unemployment, increased inflation – albeit below the SA Reserve Bank’s target range, increased vacancies through businesses closing down, increased bad debt and lower returns," he said.

“Although it just simply isn’t easy at the moment, if you believe that change is not too far away and hope ignites the needed change and moves the needle, then now is absolutely the time to buy. There have been so many opportunities in the last nine months, where calculated and prudent buyers have identified value and transacted.”

The closing down of big box retailers at some shopping centres is a cause for concern as it confirms the current tough trading market, according to Wilna Savio, portfolio executive at Broll Property Group.

“Landlords need to become more proactive, focusing on tenant retention and flexible lease scenarios as well as improved customer service to retain their customers and retailers drawing feet to the centres,” said Savio.

Breytenbach names factors impacting the commercial property sector:

Co-working or shared workspace

A new niche asset class has arisen, based on open-concept, collaborative, member-focused working environments. Co-working spaces or pop-up office locations rented for a day or longer are becoming increasingly popular. This is as technology permits businesses to run off-site for most of the time, requiring short periods in a formal office environment.

Small or micro companies as well as start-ups require configurable spaces and flexible leases in order to manage the fluctuation in their business growth. These shared spaces provide all the necessities of a regular office.

“Exponential increases in communication technology and broadband access have also allowed corporates to take advantage of the benefits of remote workforce, thus requiring smaller or less permanent office space.” explains Breytenbach.


“Crowdfunding is a concept where people with a small amount to invest can pool their resources with other similar individuals, in order to collectively acquire commercial property,” Breytenbach explains. In the past only those investors with available finance or sufficient surety for a bank loan could afford to purchase large commercial real estate, but crowd-funding has allowed smaller investors to get a foot in the door too.
This factor alone could change the dynamics of commercial real estate business in the future. There are already numerous platforms and internet sites devoted to introducing suitable parties to crowdsourcing opportunities.

Change to the traditional agent model

Advancement in technology has provided universal access and transparency of data of all kinds; no less in the commercial real estate field.
“Technology has brought together tenants and property owners through cloud computing, smartphones and social media,” Breytenbach explains, “providing a supremely convenient way to obtain property information.”

Consumers are realising that using digital technology to obtain information permits them to make more informed decisions. Similarly, agents and brokers require up to date digital solutions in order to better assist their clients, thus continuing to fulfil their role in the market albeit somewhat differently.

It may even be prudent for both agents and brokers to diversify their areas of expertise. They could expand their services by investing in data and technology so as to include consulting and collaborating with start-ups.

Shifting demographics

“The current fluidity in the demographics of the commercial real estate market offers a challenge to investors and brokers to know what the next best investment will be,” suggests Breytenbach.

The exponential growth in urban development due to more and more people moving into cities, coupled with the longer lifespan of the baby-boomer generation as well as vastly differing lifestyle choices being made by the millennials, are all major factors in the shift of the demographics of both the residential and commercial real estate market.

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