Resilient commercial property owners and businesses in Cape Town’s CBD have adjusted to the economic effects brought on by Covid-19, with flexible solutions to ongoing challenges key to the future success of the district.
This is the view of Rob Kane, Chief Executive of Boxwood Property Fund and Chairperson of the Cape Town Central City Improvement District (CCID).
“It would be misleading to create the impression that the commercial property market in Cape Town’s CBD is buoyant” he says. “Industries across the board had a hard time last year however, most businesses have now adjusted, and we are expecting improvements in 2021.”
With lockdown restrictions prompting the adoption of work-from-home strategies for many big corporates and other businesses, some companies have not yet returned to the office or they have had to downscale office space to reduce their operating costs. However, landlords are still signing profitable leases despite operating in challenging circumstances.
“Well-run buildings with good security, easy access and flexible office space still have high occupancy levels at good rental rates at present. For example, Discovery recently signed a long lease on the ground floor of Boxwood’s entire Matrix building on the corner of Strand and Bree streets. This is a huge vote of confidence in the Cape Town CBD as a first-class location to do business,” Kane says.
He believes the work-from-home trend will be relatively short-lived and untenable in the long run as company executives are already finding that working in isolation is not as productive as collaborating with colleagues in the workplace.
“To be innovative and productive, people need other people in the workplace. Young people, especially, need the experience of working in groups with colleagues of all ages to learn the ropes in any line of work. I believe it won’t be long before companies move back to office-based business models.”
Grant Silverman, Marketing and Leasing Director at national developer Abland, agrees that flexible and creative landlords are well-equipped to weather the ongoing pandemic storm in 2021.
Abland’s latest Cape Town commercial project, the R500-million development called 35 Lower Long on the Foreshore, was completed in 2020 at the height of the lockdown. Despite this, and a less-than-ideal office market, more than 50 % of the office space in the signature 14-floor building has been taken up by law firm ENS.
Images credit: Abland
The building, which has ground-floor retail, has a four-star Green Star rating from the Green Building Council of South Africa, which means that running costs are kept to a minimum and office space is designed for maximum comfort and productivity. Also included in the design is an entire floor of flexi suites, to accommodate the co-working trend.
“To maintain the Covid-19 protocols, numerous businesses are allowing staff to alternate working days in the office, so they need less space overall. But they do not want to compromise on quality, and commercial landlords need to be flexible and creative to meet these needs” says Silverman.
Kane cites a recent Harvard Business Review article on how the work-from-home movement has changed how people interact at work. Studies done by Microsoft to understand how the nature of work has changed since early 2020 showed that people’s networks have shrunk as informal interactions with colleagues – critical in a thriving workplace – have declined. People reported feeling isolated and disconnected, with teams operating in siloes. Absenteeism increased and turnover dropped. However, trends in countries where workers had returned to a hybrid work environment, such as New Zealand and Korea, reported feeling less isolated and more energised.
Silverman agrees with Kane that the work-from-home trend is not a long-term solution for all businesses, and people are starting to come back to the office.
“We have definitely noted more people coming into the city centre in the past few months. There is noticeably more traffic on the streets and office space is filling up again. This bodes well for the CBD, and the greater Cape Town metropole, economy.”