The Johannesburg office market is leading with high vacancy rates due to weak demand among the major South African Metropolitans office markets. This according a report published by JLL dubbed ‘South Africa Q2 2021 Real Estate Market’. the report noted that oversupplied market coupled with weak corporate demand in the office market continue to affect the market’s recovery adversely.
“The Johannesburg office sector finds itself treading in the deep end, as an oversupplied market combined with weak corporate demand continue to place fundamentals under significant pressure.
“At the end of the second quarter, Johannesburg has the highest office vacancy rate across all major metropolitans. Office demand dynamics have shifted considerably, as many corporates continue to scale down on space requirements in line with new work from home and the office rotational hybrid model. The net effect is that office foot count has declined significantly from pre-COVID level.”
The report observed that corporate consolidations, shifting demand dynamics, and an accelerated ‘semigration’ trend are likely to continue placing pressure on Johannesburg vacancy rates.
JLL further observed that uncertainty around take-ups vis-à-vis high construction costs continue to pose viability risks for landlords and developers alike. As such, the market has started seeing landlords compete on incentive schemes offered, all driven to attract new and retain existing tenants.
“The City of Johannesburg has been plagued with excess office stock for several years, with more than 1.7 million square metres available for leasing at the end of the second quarter of 2021.”
It concluded that the Johannesburg’s office market is anticipated to remain in turbulent waters over the foreseeable future, with vacancy rates and rental levels expected to continue softening.
Source: Mohammed Bomanso-Issah(Real Estate Times Africa)