The second quarter of the 2020 FNB Commercial Property Broker Survey saw all three major commercial property sectors, i.e. office, industrial and retail, showing declines in perceived market activity levels.
This is hardly surprising, given that the survey took place from late-May to mid-June, commencing at a time when there was still a high level of Covid-19- related lockdown, placing severe limitations on the level of property trade.
The percentage of respondents perceiving business conditions to be satisfactory declined to the lowest level since the early-2019 inception of the survey, from 49% in the first quarter to 31% in the second quarter.
When asking brokers for their ratings of market activity levels on a scale of 1 to 10, FNB still sees that the group of respondents is most upbeat (or least pessimistic) about the industrial and warehouse property market. However, industrial property’s second quarter activity rating did decline noticeably, recording 4.11, down from 5.52 in the prior quarter’s survey.
By comparison, the retail property activity rating was by far the weakest at 2.87 in the second quarter, down from the prior quarter’s 4.91, while the office property market also declined from 4.55 in the first quarter to a lowly 3.39 in the second quarter survey.
FNB’s indices for perceived change in market activity over the past six months were all negative (i.e. perceived activity declines on an aggregated basis) in the second quarter survey. The market with the highest index reading was industrial property, although this was nevertheless still a weak reading of -53. The office sector index reading was a negative of -75, implying that the percentage of respondents perceiving a decrease in activity in this sector exceeded those perceiving an increase by 75 percentage points. The retail market returned the weakest reading of the 3, a negative -82.
The property market activity near term expectations indices, reflecting broker near term expectations, saw the respondents being least optimistic about retail Property, which recorded a negative -30, while the industrial property market recorded a +32 and the office property market -23.