Eri Mitsostergiou, director of Savills World Research, says that much of the world’s existing office stock needs to adapt to meet the evolving needs of businesses, individuals and cities. Those confident in the appeal of their well-located stock will still need to innovate to appeal to workers. At the other end of the spectrum, some will need to give their space a second life and repurpose it to optimise value.
Says Andrew Dewey, managing director of Swindon Property, which is Savills’ commercial associate in sub-Sarahan Africa: “As is the case both locally and globally, woven through both these options is a strong need to meet high environmental standards – both to remain relevant with occupiers and meet growing regulatory requirements, at a time when economic viability is challenged.
“For both landlords and tenants, energy-efficient buildings typically have lower operating costs due to reduced energy consumption and maintenance requirements. Tenants benefit from lower utility bills, while property owners enjoy increased property value and reduced long-term operational expenses.
“As stated in the Savills report, to be successful in this environment, companies need their offices to act as a magnet to attract and retain talent, so creating spaces that resonate with employees’ needs is a strategic imperative.
"Younger generations of workers prioritise wellness, professional development and meaningful experiences, so companies with workspaces designed to prioritise flexibility, human scale and community can expect to see improvements in recruitment, retention, productivity and purpose."
“While there is a gradual return to the office for many organisations, the hybrid work model is expected to remain prevalent, creating fluctuations in office occupancy levels, and is expected to drive ongoing changes in tenant preferences, space utilisation and office design, with a continued focus on flexibility, technology integration, employee wellbeing and cost efficiency.
"As a result, landlords will need to adapt their offerings and amenities to meet the evolving needs of tenants in the hybrid work environment.”
Adds Dewey: “Given that interest rates are expected to gradually begin reducing towards the end of 2024, this makes the opportunity for improved returns possible and therefore investing in your office space more viable.
"While there are favourable opportunities in the current market, it’s essential to conduct thorough due diligence, assess the risks and benefits, and make decisions based on a comprehensive analysis of the market, the building’s current and potential offerings and your financial situation, which is where consulting with real-estate professionals can help you make sound investment decisions aligned with your goals.
"Our Occupier Services and Capital Markets division will assist the tenant or buyer to ensure all prevalent factors are taken into account. Signing a rental lease has its own risks but is more flexible in terms of exit or expansion.”
Positively, Dewey says there are a number of key hubs around the country where tenants and investors can find sound value, particularly evident in the entry-level categories below:
Rental prices range from less sought-after B grade (traditionally older stock) ranging from R130-R160 per sqm to P-Grade from R200-R220, with new 2025 developments currently being marketed at R240 per sqm excluding Vat. With numerous sectional title commercial buildings in Century City, prices range from R16,000 to R24,000, with P-Grade trading from R27,000 to R32,000 per sqm excluding Vat.
Entry-level and B-Grade office rentals vary from R70-R85 per sqm, and P-Grade R185-R260 per sqm. Sales prices offer sound value for money at R7,500 to R10,000 per sqm for entry-level and B-Grade office space, and R11,000 to R17,500 for P-Grade.
Many offices in this node have become more cost-effective, offering back-up power supplies and solar-power solutions. Occupants can enjoy easy access to work. Dining and living environments are within walking distance, enhancing the convenience of working and living in the area. Rental rates per square metre for Premium Grade offices range from R130-R200, while in comparison, commercial A and B-Grade offices range from R105-R120 per sqm.
The cost to purchase space in these high value-for-money areas ranges from R10,000 per sqm for B-Grade to as high as R48,700 for P-Grade, catering for both investors and owner-occupiers.
It also presents an attractive alternative with its P-Grade, Green Star-rated new office developments, complemented by a pedestrian-friendly environment and excellent amenities - a combination that continues to draw corporate occupiers seeking a vibrant live-, work- and play setting.
