Shifting market sectors
The Cape Town market is undergoing a rapid shift in two specific property sectors - retail malls and industrial warehouses over 5 000m2 in lettable area.
Since the year started, the flood of incoming qualified enquiries for these two segments has risen way beyond expectations and supply of properties either to let or for sale are in short supply.
Retail mall space to let is now being snapped up within a few short weeks and in most cases owners are carefully selecting who they want in their tenant mix. Terms of lease are still as stringent as ever, however the pre-selection process has tightened up. Property managers want to see a mock up of the tenants look and feel, the customer base they will attract, the clientele they will service to create a good experience when visiting their shopping environment. Retail mall development has stalled as most centres have taken up the prime land locations, meaning that the rates per m2 in the existing malls with good foot traffic and growth can demand more per m2.
In the case of warehousing/logistics over 5 000m2 in gross building area, we have experienced a surge of enquiries in the past 7 to 8 weeks - both for new development as well as to buy or let existing clean and modern logistics centres. The primary demand Is to let as the lead time to bring a structure into existence is lengthy.
The office supply space is still oversupplied except for a few nodes, and the structural change to this market means that office space will have to be either let at low rates; or be repurposed; or allow the market demand to come back over time.