Confidence among retailers and commercial property owners in Cape Town’s CBD has held up relatively well in early 2023, despite the state of the national economy as severe loadshedding takes its toll.
This is according to the latest business confidence survey conducted by the Cape Town Central City Improvement District (CCID) which manages and promotes investment in the Mother City’s CBD, home to over 3 000 business entities of which 1 200 are retail and entertainment.
Nearly 80% of the 230 retailers surveyed by the CCID during Q1 2023 indicated that they were ‘satisfied’ with current business conditions, a modest deterioration from the 83.3% recorded in Q4 2022 but it represents a significant improvement on the 22.9% of retailers who were ‘satisfied’ with trading conditions in mid-2020.
“This is very heartening news as it shows that Cape Town CBD retailers are innovative and resilient, and that the work of the CCID, in partnership with the City of Cape Town and SAPS, to ensure the CBD remained clean, safe and open for business, has been a success,” comments CCID CEO, Tasso Evangelinos.
“Not only is the Cape Town CBD a cultural hub, but it is also a vibrant node for business tourism, the eventing industry (with conferencing facilities with a seating capacity for over 65 000 people) and the hospitality sector: it the inner city alone there are 65 hotels, including backpacker establishments and lodges.”
One of the key reasons underpinning business confidence is the fact that certain key parts of the CBD are insulated from load shedding. A large number of businesses and residents in the inner city are shielded from power disruptions suffered by the rest of the country. This has been a particularly important benefit during Q1 of 2023, when higher levels of load shedding were the norm.
In December 2019, there were 1 237 estimated retail outlets in the CBD, according to the ‘State of Cape Town Central City Report 2020 – A Year in Review‘, published by the CCID. By the end of 2020, this had fallen to 1 163 but the retail sector was quick to adjust to the new trading conditions and, as the lockdown restrictions eased, the sector quicky recovered.
By the end of 2022, the number of retailers had risen to an estimated 1 243 – with new businesses, such as the recently launched Starbucks outlet on the Foreshore, continuing to open in 2023.
Of these 1 243 retailers, 147 are restaurants, 93 are takeaways, 112 are clothing and shoe stores, 41 are speciality stores and 53 are superettes.
In a bid to monitor the impact of the pandemic on business owners in town, the CCID began surveying retailers in May 2020. Businesses were asked what plans they were putting in place to survive the new trading environment, including adjusting trading hours, laying off staff or relying on e-commerce.
“Initially, retailers focused on reducing their expenses in response to reduced footfall and lower levels of business activity. However, as the months passed and office workers returned to the workplace in town, the focus shifted to maintaining the status quo,” says Evangelinos.
In Q1 2023, the vast majority of retailers indicated that they were satisfied that their businesses were well placed for the current business environment and those who did plan to make changes were now focused on hiring additional staff and extending trading hours.
Encouragingly, the recovery in the Central City economy is not limited to the retail sector. Landlords of the CBD’s larger commercial buildings report an influx of smaller financial and tech start-ups and waiting lists for co-workings spaces, while other commercial buildings are being converted into mixed-use or residential buildings.
The influx of new financial and digital small-scale businesses and the success of residential conversions has resulted in the office vacancy space in the Central City dropping from a high of 16.1 % at the end of 2021 to 13.3 % at the end of 2022.
While the Cape Town CBD had the highest office vacancy rate among the seven business nodes in the Mother City monitored by SAPOA before the pandemic, by the end of 2022 there were three office nodes with higher vacancy rates – highlighting the recovery in the CBD economy.
Notes Evangelinos: “The return of businesses to offices in the Central City, combined with the steady influx of new residents to growing residential property market, creates a supportive environment for the inner city’s retailers – who are supported by a growing market of customers and patrons.”