By Liezel Kruger – Commercial Property Portfolio Manager
Economic conditions, advancements in technology and tenant needs that are evolving, drive the changes in the commercial real estate market as per an article published by Spire Property Solutions.
According to the article as well as articles published by Asset Property Group, and part of what we as commercial real estate practitioners currently experience, is the rise of hybrid work environments. Businesses are prioritizing flexibility within the workforce and workplace which causes companies to occupy smaller but high-quality office spaces. Businesses are also utilising remote and hybrid work models which offers flexi workspace, flexi hours and spaces in areas closer to employee accommodation. This provides shorter commutes for the employees and a better work-life balance. Businesses seek continuous electrical supply, smart technology, facilities that inspire wellness and creates a space which offers tranquillity. These spaces are high on the list of requirements.
It is clear that Landlords need to transpose their older office spaces to cater for an evolving demand from tenants. In particular it seems that tenants would prefer a work environment which offers a mixed use which balances living, working and leisure together in one area.
Asset Property Group and Spire Property Solutions indicated that the industrial property sector remains strong which is driven by the growth of manufacturing, logistics and e-commerce. The demand for warehouses in strategic hubs is increasing significantly. This is linked to the increase in online shopping and the need to have sufficient storage in areas where the demand for online shopping’s distribution is high, and deliveries are required at a fast pace. It is of utmost importance for these tenants to have quick access to all the key transportation routes.
We note that in our environment, industrial space is evolving to require sustainable energy-efficient space with solar and sufficient water including measures to save water consumption. There is also a significant need for custom built warehouses that accommodates the tenant’s specific needs and requirements. P-grade facilities with cutting edge technology are crucial for distribution networks and these facilities are high in demand.
Buildings with energy efficient certifications and designs as well as solutions for renewable energy (solar and rainwater harvesting) is becoming a non-negotiable for stakeholders in commercial real estate.
Flexible leasing modules are in demand. Shorter lease periods with options and flexibility to expand or downsize are trending. Tenants are demanding commercial space that are fully furnished and has a plug-and-play space. Revenue sharing options between tenants and landlords are also on the uprise.
In conclusion office spaces are facing a challenging future due to the long term effect of hybrid work. Office space requires significant transformation and a mind shift by landlords and developers. On the other side of the coin are industrial and retail sectors which are leading the way.
Any investor or developer looking to invest or develop commercial property in the future, needs to understand the aforementioned trends as it will have a significant impact on the way these facilities are developed and the areas in which they are developed.
References:
https://www.spire.co.za/news/2025-commercial-real-estate-trends-in-south-africa-what-to-expect
