Office property sector still facing major challenges

BY THE end of last year, activity in the commercial property market had starting improving, following a dip in the third quarter.

This decrease was more than likely due to a quarterly contraction in the economy and the disruption caused by the widespread unrest and looting damage in KZN and Gauteng, says FNB commercial property economist John Loos.

However, the renewed activity from October to last month “suggests that the impact of disruptions of the third quarter were perhaps largely a thing of the past”.

The industrial property market continues to perform best of the three main commercial property sectors.

“This probably shouldn’t be surprising, as it is the most affordable property class, as well as arguably the most adaptable, factors that can be relative positives in tough economic times, while warehousing and logistics are said to benefit from increasing focus on online retail.”

Although there is evidence the retail property market battled to achieve further strengthening in recent quarters, Loos says office property remains the weakest.

“The office property sector has the biggest challenges of the three classes, with a many companies reassessing their office space needs.”

The warehousing and logistics sub-sectors have been benefiting from the increased focus on online retail. PICTURE: PXHERE