Covid-19 sparking big changes in business and property arena
Rent would decrease and more opportunities were coming on stream, says Andrew Jefferson
Covid-19 has exposed a rich vein of commercial properties that are, or will soon be, standing vacant as cash-strapped tenants are forced to close down, either reneging on rent or negotiating an amicable exit.
Fresh Lifestyle Properties principal Brian Kinnear said while several companies were reviewing their long-term commitments and some were closing, it was leaving gaps for others to cherry-pick ideal sites.
“The big boardroom question right now is do we need a brickand-mortar monolith or can we cut down our space and make what has been a temporary work-from-home arrangement our permanent operating standard?”
Xolile Sizani, Group CEO at facilities management company Servest, said: “Covid-19 has ushered in new requirements for 21st century employees. The new norm demands social distancing, exceptionally high hygiene and safety standards, but at the same time not sacrificing productivity.
“One thing is clear- most businesses are already experiencing massive workforce and layout changes, stimulated by trends, lifestyles, socio-economic and digital innovations.”
He said the generation’s gap — with up to four generations in one space — created challenges, as each has different needs and different work styles. Numerically, Generation Z and millennials rule, and their needs for balance between work and life, collaboration and creativity must be the key consideration
“From a long-term investor or tenant perspective,” Andrew Jefferson, a director of Cape Town-based Annenberg Property Group said, “it is a buyers’ market, the best we have seen for a long time.”
He said rent would decrease and more opportunities were coming on stream.
“Companies, especially big or aspirant retailers that have been looking for the ideal space for a while, are starting to find what they need at affordable prices. Vacancies are occurring as existing tenants simply have to default on leases and move out as businesses buckle and fold.
“However, generally speaking, there is no question that bigger is going smaller, due largely to the realisation that home working is viable.
“Companies that have become comfortable in spacious, 2,000m² offices are discovering that 200 will suffice.
“All they really need is a boardroom, meeting room and work spaces, with top end IT. Downsizing will take a big chunk out of their rent at exactly the time they need it.”
Sizani said due to the pandemic, less commuting has been one of the biggest contributors to better work-life balance. It has also compelled a greater technology enablement.
He said that in 2019, almost a quarter of Swiss employees spent some time working from home, and this doubled when Covid-19 hit.
It did not create any productivity problems, as a Deloitte Switzerland study revealed; instead there was a clear increase in productivity resulting from working from home.
“The same experience is being felt by some of the skilled professionals in SA. A report from Dimension Data indicates that approximately 42% of SA companies had full-time employees working from home in 2017.
“And up to 75% of these employees highlighted that they were more productive working in a home office environment.”