Building statistics for the commercial property sector has shown growth for 2021 in sqm of building plans passed but the levels have not fully recovered to pre-lockdown figures, says John Loos, Property Sector Strategist at FNB Commercial Property Finance.
The StatsSA December 2021 release of non-residential building plans pointed to a weak picture for the commercial property building sector in the run up to 2022, despite some growth in new planning activity.
The square meterage of total industrial, retail, and office space building plans passed rose by +67.62% year-on-year in December 2021, following a -41.22% year-on-year decline in November.
FNB reports a +26.19% increase in the 12-month moving total to December 2021, up from +13.6% for the 12 months to November with the +26.19% growth rate for last year a significant improvement on the -33.47% decline in plans passed for the 2020 lockdown year.
However, the post-lockdown levels of plans passed have remained below pre-Covid-19 levels. For 2021, square meterage of plans passed were still -16% below 2019’s figures and -30% below 2018.
Building completions declined sharply by -44.65% year-on-year in December 2021, a decline on the -3.14% for November. On a 12-month moving total basis, square meterage completed was slightly down by -6.21% year-on-year for the 12 months to December, compared with a -1.74% decline for the 12 months to November.
For 2021, square meterage completed was weak, being 38.15% down on 2019 and -22.2% down on 2018 levels. While total square meterage of commercial buildings completed declined for 2021, growth in plans passed suggests that there may be some growth still to come in completions this year.
Office
Planning and completions in this sector are the key dampener on overall commercial property building levels with plans passed declining by -66% year-on-year in December 2021.
Interestingly, for the 12 months to December 2021, square meterage of office space plans passed grew year-on-year by +20.13% but this growth does not compensate for the -46.09% year-on-year decline for the 12 months to December 2020.
2021 levels of plans passed for office square meterage were still -35.2% down on 2019 and -56.6% lower than 2018.
Despite the growth in plans passed in the office sector in 2021, it is the major dampener on overall building activity, being the sector still the most significantly down on 2018/2019 levels and challenged by a high vacancy rate on a national average basis.
Retail
For the 12-months to December 2021, square meterage of retail space plans passed were -22.98% year-on-year, -27.8% down on 2018 and -35.8% down on 2018.
While not as bad as the office sector, retail is still weak and it faces significant challenges i.e., the 2020 recession and online retail.
Industrial
Industrial building activity is the least weak of the 3. Besides being the most affordable, it has received a boost from greater online retail levels, but its macro fundamentals remain weak, manufacturing production remaining mediocre and the economy-wide inventory levels low.
For the 12 months to December 2021, square meterage of industrial space plans passed were +52.27% up year-on-year.
Industrial building activity is the strongest of the 3 sectors, although it has still not recovered to pre-lockdown levels.
FNB anticipates some ‘tapering off’ in building plans passed growth this year, due to the recent onset of interest rate hiking.
