Commercial Property May 2022 Edition by SundayTimesZA

MAY 2022

ART w w w.businessmediamags.co.za

INSIDE: › GREEN BUILDING INNOVATION › THE CHANGING OFFICE SPACE › GROWTH OF INDUSTRIAL MARKETS

REDEFINING THE LIVE-WORK EXPERIENCE

Steyn City Clubhouse

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STEYN CITY – 2 000 ACRES OF POSSIBILITIES

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Picasso Headline, a proud division of Arena Holdings Pty (Ltd), Hill on Empire, 16 Empire Road (cnr Hillside Road), Parktown, Johannesburg, 2193 PO Box 12500, Mill Street, Cape Town, 8010 www.businessmediamags.co.za EDITORIAL Content Manager: Raina Julies rainaj@picasso.co.za Contributors: Caryn Gootkin, Gareth Griffiths, Denise Mhlanga, Itumeleng Mogaki, Rodney Weidemann Copy Editor: Brenda Bryden Content Co-ordinator: Vanessa Payne DESIGN Head of Design: Jayne Macé-Ferguson Senior Design: Mfundo Archie Ndzo Advert Designer: Bulelwa Sotashe Cover Image: Courtesy Steyn City SALES Project Manager: Merryl Klein merrylk@picasso.co.za | +27 21 469 2446 PRODUCTION Production Editor: Shamiela Brenner Advertising Co-ordinator: Fatima Dramat Subscriptions and Distribution: Fatima Dramat fatimad@picasso.co.za Printer: CTP Printers, Cape Town

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has changed the live-work balance of its residents for the better.

16 PROPERTY MANAGEMENT 6 Digital technologies designed to improve

FINANCE 7 The post-pandemic movement in owner-serviced occupied spaces is bringing about many changes. Many owner-occupiers are selling their properties; and the reasons why are shifting.

INDUSTRIAL MARKETS 9 Navigating the challenges and celebrating the wins within the retail sector. reproduced in any form without written consent of the publisher. The publisher is not responsible for unsolicited material. Commercial Property is published by Picasso Headline. The opinions expressed are not necessarily those of Picasso Headline. All advertisements/advertorials and promotions have been paid for and therefore do not carry any endorsement by the publisher.

Growth potential, and the new industrial occupier profile, shift the “demand versus supply” trend within the industrial development sector.

The rise of urban villages is changing the face of mixed-use developments. We profile BlackBrick’s bespoke approach to the repurposing of existing commercial buildings into urban resorts.

GREEN BUILDINGS 16 Buildings produce 39 per cent of the world’s C02 emissions while 30 per cent of the energy consumed in buildings is wasted. We look at what it means to run efficiently and ecologically sustainable commercial spaces.

buildings and properties are making the industry more customer-friendly and sustainable.

MANAGEMENT Management Accountant: Deidre Musha Business Manager: Lodewyk van der Walt General Manager, Magazines: Jocelyne Bayer

MIXED-USE DEVELOPMENTS 14 Steyn City’s 2 000 acres of possibilities

Unveiling Fujifilm’s green building innovation; and the growth of green buildings.

OCCUPIER SPACE 18 Hybrid workspaces are trending. Experts share their views on this and other trends within the sector.

INSIGHTS 20 The property market is set to make a recovery this year, we look at where the gains will be and which sectors will be less fortunate. Plus, millennials are moving to the inner cities, we explore what this means for the market and the economy.

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Contents

COMMERCIAL PROPERTY

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PROPER T Y M A N AGEMEN T

THE PROPERTY MARKET

AND DIGITISATION

offer and channel marketing manager for digital he real estate arena has been lagging energy at Schneider Electric. in respect of digital initiatives. However, “This can be as simple as having a the COVID-19 pandemic afforded this solution that can automatically turn lights sector the time and space to shift and air-conditioners off and on when needed. focus and begin leveraging the growing Such an approach is notably effective in the number of proptech solutions being developed. hospitality industry, where The property industry many people return to specific collects a lot of data, says hotel chains based on their Pat Masithela, CIO at Liberty previous experiences. Building Two Degrees, a real estate management systems that investment and development improve ease and comfort go a firm, but it seldom uses this long way towards boosting the data as effectively as it could. overall customer experience “Proptech solutions allow and the likelihood that the you to leverage this data, customers will return,” he says. together with analytics and “Proptech solutions like this artificial intelligence (AI), to definitely add to a building’s monitor key aspects of the resale value, demonstrating property, identify areas of that the building is digitally inefficiency and come up with Pat Masithela transformed and more solutions,” he says. efficient. The same goes He adds that proptech is a for renting a building that is fully up to date broader field than merely providing solutions for technology-wise, as you can charge a higher building monitoring and management systems. premium for a space where utilities are “It is about specialised players developing controlled by automation.” unique technologies to help property owners and developers remove inefficiencies and improve their ecosystem. DRIVING ENERGY-EFFICIENT BUILDINGS “The key to success in this field is to The most beneficial aspect of proptech understand the needs of the industry. Too many solutions today is how they assist property developers create solutions they consider to owners to develop sustainable, eco-friendly be great, but which have not been developed operations, comments Georgina Smit, head to solve a specific problem. As a property of technical at the Green Building Council of developer, I want them to answer questions like South Africa (GBCSA). how does it help me “With so much of the focus on net-zero manage costs more buildings – creating no carbon emissions – efficiently, will it help digital solutions in the property industry have a attract more customers, vital role in helping us meet the ambitious goal can I run sustainable of having all new buildings net-zero by 2030 and clean operations?,” and all existing buildings net-zero by 2050. he explains. Digitisation of buildings will be an essential step to reaching these targets and driving more energy-efficient buildings,” she says. BUILDING AUTOMATION The answer to the last question comes in the form of building automation, according Anoop Hariparsad GEORGINA SMIT to Anoop Hariparsad,

Georgina Smit

TECHNOLOGY CREATES A BETTER WORKPLACE Georgina Smit of the GBCSA says that building owners today place increased focus on employee health and wellbeing, using innovative digital solutions to help them create safe, healthy, productive and desirable places to work. These include: • Monitoring and metering. Traditionally used for water and electricity, these technologies have become increasingly digitised and offer building owners and tenants real-time usage feedback. • Sensors. These monitor aspects of employee health and wellbeing. For example, monitoring CO2 levels, volatile organic compound levels, occupancy, light levels, humidity and heat in real-time, ensuring a more comfortable working environment. • Building automation. Digital automation of building systems improve performance as systems can be automated to shut down when not in use.

“Digital solutions offer real-time insight into a building’s performance, leading to efficient management of utilities like water, energy, waste management, and even things like airflow and glare. These can mean big improvements in tenant comfort levels and savings in utility spend.” As Masithela puts it: “An increasing number of shoppers today are millennials, for whom sustainability is an important consideration. I believe we are rapidly heading towards a point where sustainability will be a critical factor for whether people choose to visit or work in your building.”

“THE MOST BENEFICIAL ASPECT OF PROPTECH SOLUTIONS TODAY IS HOW THEY ASSIST PROPERTY OWNERS TO DEVELOP SUSTAINABLE, ECO-FRIENDLY OPERATIONS.” –

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Proptech solutions – digital technologies designed to improve buildings and properties – are making the industry more customer-friendly and sustainable. By RODNEY WEIDEMANN

COMMERCIAL PROPERTY

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SALE AND LEASEBACK – A WIN-WIN TRANSACTION

THE OWNER-SERVICED

Some businesses sell the property they operate from to an investor and then rent the property from the new owner. “This unlocks capital to invest in the business, and is an attractive investment proposition for a buyer who gets a tenanted building,” says Andrew Dewey, managing director of Swindon Property. “Property is a big noncore asset with a flat stagnant yield while the business may enjoy a higher growth, so it makes more sense for them to invest the money into the business. And the buyer knows the quality of the tenant they are getting.”

PROPERTY MARKET CARYN GOOTKIN takes a look at the post-pandemic movement in owner-serviced occupied commercial property

wner-occupiers are typically engaged in business activity outside of the commercial property sector, but operate from a commercial property. “The scope of the primary sectors within which owner-occupiers operate reaches across the economy,” says Klaus-Dieter Kaempfer, head: commercial property finance and equity investments, Absa Corporate and Investment Banking. “Many sectors were negatively affected by the COVID-19 pandemic, so lots of owner-occupiers and potential owner-occupiers within these sectors would have suffered.” Businesses have to reduce their costs to stay afloat. “The prospects for owner-occupiers are tied not only to the prospects of the economy as a whole, but also to those of the sectors and industries within which they operate,” says Kaempfer. “South Africa’s economy grew by 4.9 per cent in 2021 on the back of a 6.4 per cent decline in 2020. Even with the recent recovery, some sectors are still experiencing challenges, while others, like data and fibre providers, benefitted from the pandemic.” Despite the recovery, many owner-occupiers are selling their properties, and the reasons why are shifting. FNB’s 23 March 2022 report Property Insights – Motives for Selling shows that most owner-occupiers selling or relocating are perceived to be doing so because of financial pressures. The report also reveals that levels of upgrade-related selling are increasing, with 20.46 per cent perceived to be selling to move to bigger or better premises and 25.25 per cent to move closer to their markets. “While we are seeing a post-pandemic normalisation in many property sectors, there is continued pressure in the office sector,” says Andrew Dewey, managing director of Swindon Property. “Vacancy rates are still higher than pre-COVID-19 levels, and rentals have seen an average 20 per cent decline, which has directly impacted property values.”

OPPORTUNITY TO BENEFIT IMAGES: ISTOCKPHOTO.COM

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F IN A NCE

This creates an opportunity for proactive tenants to capitalise on slightly lower property values to become owner-occupiers rather than tenants. “We concluded several owner-occupier transactions in the third and fourth quarters of 2021, with a good spread across the sectors from retailers increasing their footprint in Cape Town and Johannesburg to single-premise industrial users in Cape Town and Durban. We also saw a

“OWNER-OCCUPIERS REAP THE BENEFITS OF A COMPOUNDED CAPITAL GROWTH ON THEIR ASSET WITH AN EXPENSE COST THAT CAN BE OFFSET ON THEIR BOOKS.” – ANDREW DEWEY

few opportunistic office tenants entering the owner-occupier market by acquiring offices,” says Dewey. There are several reasons new owner-occupiers may enter the market. “Some want to purchase facilities to secure their business operations from the risk of having to move,” says Kaempfer. “Furthermore, by owning property, they can often better customise it to suit their business’s individuals needs. These new entrants either purchase the premises they are renting or look for similar premises in a similar location.” “Owner-occupiers are traditionally well supported by financial institutions in terms of lending structures,” says Dewey. “Often, the properties have been upgraded or customised and are usually well maintained, which has a ripple effect on neighbouring properties and the area. Owner-occupiers reap the benefits of a compounded capital growth on their asset with an expense cost that can be offset on their books. We have also often seen that when the business and property are sold, the property value far exceeds that of the business value.” “Some managers prefer to control every aspect of their value chains and may decide to own all or most of the premises from where their business operates,” says Kaempfer. “Other organisations may prefer to lease space and concentrate most of their capital on what they consider to be core operations. Some businesses dispose of their property assets to raise capital and then lease back these facilities from a property investor – a sale and leaseback.”

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FAST FACT

According to Estienne de Klerk, Durban and Cape Town’s office sector is outperforming Johannesburg. In Durban, the market has essentially normalised (although rentals remain weak), while Cape Town is nearing normal levels. Growthpoint’s Lakeside Mall.

A GLIMMER OF HOPE

ON THE HORIZON? While no one can deny that the commercial and retail sectors have experienced better days, it would be unrealistic to expect anything else – and not just because of recent challenges, writes LISA WITEPSKI

ven before COVID-19 introduced a host of dynamics that would undermine the commercial and retail sectors’ performance, they were seeing the effects of the end of the long upcycle that peaked in 2019. The challenges that have arisen since then have impacted the sectors in various ways, points out Ben Kodisang, founder and CEO of Alt Capital Partners. Take retail, for example: initially, regional and super regional malls were especially hard hit, but appear to have gained many of the losses resulting from lockdowns and last year’s riots. In fact, says Kodisang, many have reached pre-COVID-19 levels in terms of trading and vacancies. The real winners, though, are the neighbourhood and convenience stores, many of which are found in townships and rural areas. Stores measuring 1 200m2 and below have held up remarkably well, and rentals are now showing growth. This is to be expected, Kodisang says, given the untapped potential in rural areas and the unexpected benefit of COVID-19 grants, which have helped buoy the market. Estienne de Klerk, CEO South Africa of Growthpoint Properties, agrees that the negative retail rental trend may soon reverse. Ironically, online shopping is a driver here: “South Africa’s online shopping story is about the growth of last-mile fulfillment, which has played out in favour of our retail properties. Delivery platforms all source their deliveries from physical stores, which contributes positively to turnover in our malls,” he says.

IN THE OFFICE

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INDUS T RI A L M A RK E T S

Ben Kodisang

Offices, meanwhile, are faring less well. Between 2018 and 2019, consolidation of office space emerged as a major trend, driven by large players like Discovery and Bidvest. This trend was most prevalent around Sandton and other major metropoles and meant that office vacancies were already up before WFH (work from home) became a commonly used acronym. Now that remote working seems likely to remain a feature of our lives even after the next COVID-19 wave, property players are at a loss when it comes to predicting whether occupancies will ever return to 2019 levels. Kodisang guesses that we are likely to see a hybrid work model emerge, with workers spending at least some days of the week at their home offices.

“DECENTRALISED OFFICES LOCATED CLOSER TO TRADITIONAL RESIDENTIAL AREAS ARE COMING BACK INTO VOGUE.” – ESTIENNE DE KLERK

De Klerk predicts that the offices that will fare well are those that accommodate flexibility. “Decentralised offices located closer to traditional residential areas are coming back into vogue,” he informs, adding that “hub-and-spoke” office strategies, which combine headquarters with a mix of regional offices, are also growing in popularity.

WHAT LIES AHEAD? Kodisang reiterates that opportunities still exist in the convenience retail sector, driven by the misalignment between supply and demand that has its roots in apartheid-era spatial planning. The forecast for super regionals is less rosy, though: “During the last upcycle, we saw a lot of focus on this area,” Kodisang observes, indicating that as South Africa now has the second-highest number of malls in the world (after the United States), the market has likely reached capacity. The outlook is a little different when it comes to acquisitions. Opportunities here are driven by offshore diversification, with many listed companies continuing with a strategy first introduced several years ago. “Many are aiming for an even split between local and international properties, and they may then sell on some properties – probably to unlisted companies – in an effort to manage debt. “An era of plenty always hides a lot,” Kodisang says. In this case, the upcycle encouraged players to drive international portfolio efficiencies through asset management activity, such as enhancing financial structures and profile management – but with players having taken this as far as it can go, they will need to look at property management. “I foresee a time of more intense negotiations with tenants, active management of utilities, and a big focus on getting the tenant mix right.” De Klerk indicates that companies may benefit from co-investment and management. “It may also pay to explore alternative investment products in the unlisted and co-invested environment – a strategy we have followed to diversify our assets and create sustainable value for our stakeholders and investment partners,” he explains.

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INDUS T RI A L M A RK E T S

TOMORROW’S TENANT What is tomorrow’s tenant looking for? Increasingly, they’re seeking to offer a more conducive environment for workers, so expect warehouses with a corporate look. The trend towards consolidation sees larger corporates setting up a “campus”-style environment that allows for the cross-pollination of ideas between different units.

Industrial property LISA WITEPSKI finds out if the growth within the industrial property sector is just a passing trend

hile the retail and commercial property sectors are trying to claw their way back to pre-COVID-19 rates, the outlook for the industrial sector is far more positive. But, says Ryan Eichstadt, head of investor relations and corporate finance at Fortress REIT, the sector isn’t quite where it was. “Looking at building plans passed and completed buildings as a proxy for total industrial supply-demand dynamics, it’s evident that the effects of the pandemic weighed on new space (GLA m²): the number of plans for industrial plans passed decreased by 39 per cent between 2020 and 2019, while building plans completed dropped by 23 per cent. Meanwhile, new industrial building plans passed was still down by 8 per cent in 2021 compared to pre-COVID-19 levels.” He adds that, as may be expected, the sub-sectors of industrial sectors are all performing differently, with logistics and warehousing outperforming segments such as manufacturing and industrial parks. Grant Smith of the JT Ross Property Group says there’s a chance that at least some of the current demand may be artificial – at least in Durban, where the impact of 2021’s riots and the April floods have played a role in ensuring that building vacancies are rare.

Developments in Durban – the 2021 riots and April floods – mean that tenants are looking for warehouses and buildings in other parts of the country, such as Port Elizabeth, where BSP Construction’s Brett Paxton says further factors are creating additional impetus. “We’re seeing the impact of the recovery of the retail and manufacturing sectors, while many businesses are moving away from established areas that have a reputation for crime. Added to this, many small and medium businesses are showing an interest in owning, rather than leasing, buildings, and new businesses – established out of opportunities emerging from the pandemic – are on the lookout for ‘start-up’ units (usually measuring between 200–500m2).” The situation is slightly different in big cities such as Johannesburg, although demand is still “huge”, in Smith’s words, especially in areas such as the East Rand. Also affecting demand, says Smith, is the consolidation of larger players, which sees them swapping out several smaller spaces for a single larger warehouse to leverage efficiencies.

NEW TRENDS The industrial sector’s look is slowly evolving. With modernised racking systems, it’s now possible to achieve stacking heights of 12m, so roof heights are increasingly common.

“MANY SMALL AND MEDIUM BUSINESSES ARE SHOWING AN INTEREST IN OWNING, RATHER THAN LEASING, BUILDINGS, AND NEW BUSINESSES – ESTABLISHED OUT OF OPPORTUNITIES EMERGING FROM THE PANDEMIC – ARE ON THE LOOKOUT FOR ‘START-UP’ UNITS.” – BRETT PAXTON 10

ANY CHANCE FOR GROWTH? It’s not surprising demand for land is high in Durban, given the province’s physical constraints (the sea is, after all, a formidable obstacle to development), along with compromised infrastructure. One solution that seems to be gaining traction is the adoption of a “developer pays” principle, with developers committing to invest in infrastructure before they embark on developing townships. The challenge, though, is that this adds another layer of cost, which is prohibitive to growth and ultimately means that it is more likely that existing industrial land and buildings will experience positive rental growth, Smith says. The impact of the floods may add another layer of complexity to the situation, creating a push for the regeneration or retrofit of existing buildings. “The situation in Johannesburg is different because there are many more players and more space to grow. Infrastructure is more robust – the freeways are larger, and it is easier to tap into potable water,” Smith replies. In this case, demand is likely to give rise to new buildings – but, then again, large tracts of land are required to answer this need; hence developers’ interest in areas like Johannesburg’s East Rand. “The industrial property sector may be flavour of the month, but I don’t think this is a flash trend. There’s a growing demand for a specific product, and if we are able to answer it, the trajectory will continue for some time,” Smith concludes.

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The stellar performer:

So, too, are facilities offering off-grid power, says Paxton. He adds that the industry is likely to see a growing demand for smaller units with additional parking. Smith says that an increasing number of tenants are on the lookout for facilities that mimic the “office park” environment, which typically offers good security and are located in well-maintained areas. “The idea is that the facilities should mirror the brand of the tenant and its products.” Something else to look out for, notes Paxton, is facilities combining retail and warehousing.

COMMERCIAL PROPERTY

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MIXED-USE DE V EL OPMEN T S

Steyn City, a dynamic mega residential mixed-use “city” located north of Fourways and southeast of Lanseria, is successfully evolving along with the vision of its founder, Douw Steyn. By GARETH GRIFFITHS

teyn City head of marketing Zoe van Onselen says “it has been a very busy past year for the developers of Steyn City”. Indeed, Steyn City Properties seem to have worked hard to deliver on its vision of creating the ultimate lifestyle for residents. “We launched the first phase of our flagship project, City Centre, while simultaneously launching world-class amenities such as a 300m lagoon and the Ultimate Helistop. Later in the year, we will introduce our new on-site storage facilities. This means that residents will no longer need to go off-site to store boats, bikes and other luxury items.” However, there is more to these evolving new facilities than meets the eye in that every step taken as this legendary development rolls out complements those already in place. For example, this new infrastructure complements Steyn City’s existing Zoe van Onselen state-of-the-art facilities, including the highly regarded Steyn City School, where learners from Grades 000 to matric get an enhanced learning experience. Van Onselen expands: “Classrooms include spacious balconies so that teachers can address all learning styles, from kinetic to

DID YOU KNOW?

The Ultimate Helistop is a seven-star facility offering chartered flights to residents and nonresidents. Designed for convenience, the helistop enables busy individuals to catch up on emails and deadlines in a fully equipped lounge and/or private meeting room.

visual. Along with specific classrooms like science labs, a media hub and music rooms, there is an auditorium offering cultural activities, and the finest of sporting facilities.”

LIFESTYLE OFFERINGS The development is also known for its commitment to a wellbeing-rooted lifestyle via features like a 45km floodlit jogging and walking promenade. There’s even a 50km MTB track that also gets used for organised cycling events, an indoor aquatic centre with a 25m heated indoor pool, and the 300m clearwater lagoon. There are several eateries, a world-class equestrian centre, floodlit tennis courts, outdoor workout stations, play nodes for children, and the legendary Nicklaus Design Championship golf course.

• Steyn City covers 2 000 acres (four times the size of the State of Monaco). • Over a million indigenous trees, shrubs and ground covers have been planted in Steyn City, creating a unique urban forest and ecosystem. • Steyn City has over 50 land art installations to enjoy and interact with, all created by local artists. • Steyn City was ranked top residential estate in Gauteng in 2019 and listed among the world’s top ten best lifestyle estates in 2021 by New World Wealth.

WORKING CLOSE TO HOME Lambert Bezuidenhout, Steyn City head of sales, suggests that Steyn City’s goal has always been to create a space where residents can live, work and play. Capital Park, a commercial development within the estate, is central to this vision. With the second of the office park’s 10 buildings completed, AAA-rated offices, with premises starting from 150m2, offer easy access to major routes. “Capital Park offers versatility with a plus, suitable for any business – from creative start-ups to major corporates. The site, landscaped in line with the Steyn City masterplan with trees and water features, offers an advantage to employers who understand the true value of enhancing the work-life balance,” he says.

A HOME FOR ALL The span of Steyn City’s offering means that it has broad appeal with homes catering to discerning buyers at all life stages, from executives to growing families and retirees. Lambert adds that Steyn City has become the primary residence of most buyers – from an investment in an open stand to build, a luxury apartment or a cluster for the ideal lock-up-and-go lifestyle. However, it is not only the residents who benefit from this legacy project. Job creation programmes have created employment for thousands of people. In addition, take-home pay is more as these workers can walk to work, saving money on transport costs. “We are proud to play a role in uplifting the residents in our neighbouring Diepsloot community. Many clerical and admin staff live at the nearby low-cost development, Riversands,” van Onselen says.

“CAPITAL PARK OFFERS VERSATILITY WITH A PLUS, SUITABLE FOR ANY BUSINESS – FROM CREATIVE START-UPS TO MAJOR CORPORATES.” – LAMBERT BEZUIDENHOUT

COMMERCIAL PROPERTY

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REALISING A VISION

FAST FACTS

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Steyn City Clubhouse.

MIXED-USE DE V EL OPMEN T S

An artist’s impression of the new urban resort BlackBrick Bedford.

THE RISE OF URBAN VILLAGES What is an “urban village”, a term increasingly used in post-COVID-19 property lingo. GARETH GRIFFITHS interviewed major roleplayers in this exciting new field

outh African developer BlackBrick is making a strong statement in the mixed-use live-andwork property space with a bespoke approach to the repurposing of existing commercial buildings into what the company calls “urban villages”. Boasting a mix of hotel and apartment offerings, BlackBrick pioneered its approach to property development based on the surplus of office space in the market and the scarcity of residential options. It addresses a gap in the market, created by the needs and aspirations of the new and upcoming generation of first-time property buyers and investors. The offering suggests a higher than average market return on property investment.

Moritz Wellensiek, founder and MD of BlackBrick, says that a resort hotel is a hotel that often contains full-sized luxury facilities with full-service accommodations and amenities – as per the Wikipedia description. “Our urban resorts are often within an urban setting, with an acute focus on work and leisure mixed into one ecosystem. What we do differently is offer hotel apartments with kitchens and lounges – not just hotel rooms – at accessible prices,” explains Wellensiek. “In 2018, we acquired our first property, the former Abinbev Head Office, and converted it into 208 hotel apartments. We now have 548 apartments under construction and aim to have 2 207 hotel apartments operational by 2024 throughout South Africa and Africa. Our ultimate vision is to have a global network of 100 BlackBrick Vertical Villages by 2033. Our mission is to be a platform for as many people as possible to live a full life. Anyone who is a free-minded individual is welcome to join our community and become a member of the tribe – the BlackBrick Club. Most of our customers are young, dynamic up-and-coming magic-makers who see BlackBrick as a platform to be themselves and grow.” “At present, we are the developers and operators. We have an on-site community management team that activates and co-ordinates each resort’s programming. Once we have refined our product, we will partner with reputable developers and use licensing and franchising to grow into new territories not native to us.” IMAGES: BLACKBRICK

IMAGES: STEYN CITY PROPERTIES

WHAT IS AN URBAN VILLAGE AND HOW DOES IT WORK?

“OUR MISSION IS TO BE A PLATFORM FOR AS MANY PEOPLE AS POSSIBLE TO LIVE A FULL LIFE. ANYONE WHO IS A FREE-MINDED INDIVIDUAL IS WELCOME TO JOIN OUR COMMUNITY AND BECOME A MEMBER OF THE TRIBE.” – MORITZ WELLENSIEK

Rooftop Conversation Lounge (Cape Town) available to BlackBrick members.

BlackBrick sees itself as a recycler of underutilised office buildings. Wellensiek says that his company will also “be taking over, redesigning and optimising existing operations, developing new buildings, and taking on suitable apartment buildings to satisfy the developer’s location mandates”.

A DEVELOPMENT HIGHLIGHT A recent highlight is a special development on the location of the former ACSA head office in the Riverwoods Office Park near Bedfordview. BlackBrick Bedford will become an urban resort set inside a 35 000 m2 forest, conveniently positioned between Sandton and the airport. Wellensiek believes the investment returns would be eight per cent. Situated in extensive parkland, the new urban resort will offer the established facilities, services and amenities, including co-working spaces, but also padel tennis, a pool clubhouse, outdoor cinema, running trail, all-day cafe and deli and other features. This new development will target long-stay as well as short-stay residents, and/or travellers. BlackBrick Bedford has two development partners – the Setso Property Fund, a regular development funding partner, and Growthpoint Properties, which currently owns Riverwoods. Commenting on Growthpoint’s role, Paul Kollenberg, Growthpoint head of asset management: office, says: “We frequently evaluate the properties in our portfolio and consider all options to unlock the best value from our assets. “With little alteration and no additional development bulk, Riverwoods lends itself to residential conversion. By retaining the structure and many raw materials, we are conserving energy and reducing carbon emissions. This eco-friendly approach to building a vibrant urban community is a great result for Riverwoods, seeing Growthpoint exit its investment in this asset when the redevelopment is complete. It’s part of our ongoing programme of disposing of noncore assets. The move demonstrates Growthpoint’s agility in changing markets and commitment to a built environment that makes sense for society, the environment and its business.”

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GREEN BUIL DING S

FAST FACT

In 2021, the Green Building Council South Africa certified 140 properties as green buildings. WSP Africa was involved in 15 of these buildings.

COMMERCIAL BUILDINGS Buildings produce 39 per cent of the world’s C02 emissions while 30 per cent of the energy consumed in buildings is wasted. DENISE MHLANGA looks at what it means to run efficiently and ecologically sustainable commercial spaces

lobally, the built environment accounts for 39 per cent of carbon emissions, according to the United Nations Environmental Program. The use of renewable and more sustainable energy resources can reduce the carbon emissions associated with these buildings. Alison Groves, WSP Africa building services regional director, says green buildings or resource-efficient buildings are key in increasing buildings’ resilience against climate change effects. “Green buildings offer optimised performance resulting in commercial viability,” says Groves, adding that green buildings have between 20 to 70 per cent energy savings resulting in return on investment, but all this depends on the green elements of the building. Lisa Reynolds, Green Building Council South Africa (GBCSA) CEO, says green buildings have environmental, economic, health and social benefits for both people and the planet. “When we build green, we produce less waste and emissions, thus lowering buildings’ maintenance costs and boosting workplace productivity,” says Reynolds. The property sector contributes significantly to carbon emissions and energy consumption; and South Africa’s reliance on coal-derived energy exacerbates the situation, says Brian Unsted, head of good spaces and asset management executive at Liberty Two Degrees (L2D). Ongoing electricity cuts have highlighted the critical need to adopt new energy sources. “There is a strong business case for embracing wider use of solar PV systems in the commercial and residential property sectors to generate a significant proportion of a building’s energy requirements,” he says. L2D, which owns the iconic Sandton City and other buildings, aims to achieve net-zero carbon by 2030 to decarbonise the built environment. Net-zero is a global target to reduce the amount of greenhouse gases produced by human activity through emission reduction by 2050. In South Africa, sustainability has gained traction, with many property owners turning to green buildings to attract and return tenants increasingly looking to occupy green buildings. “Although things are changing, there is still resistance within the property sector to embrace green buildings,” says Unsted.

“DEVELOPING BUILDINGS AIMED AT IMPROVING OCCUPANTS’ HEALTH AND WELLBEING IS CITED AS A MAJOR TRIGGER DRIVING GREEN BUILDING ACTIVITY.” – ALISON GROVES 16

ESSENTIAL ELEMENTS IN GREEN BUILDINGS Groves says to make buildings more sustainable, whether new, refurbished or existing buildings, many interventions can be implemented. These include optimising thermal comfort and fresh air availability through building design, smart and energy-efficient lighting, using recycled materials, reducing water consumption by fixing leakages, and on-site recycling. “Having operational measures within a building would guide building managers and occupants to adopt more sustainable processes helping with the daily building management operations,” says Groves. In the case of L2D, Unsted says they consider elements including energy efficiencies like using energy-saving bulbs, toxic reduction, water usage reduction and reuse through rainwater harvesting to curb shortages. L2D insists on environmentally preferable building materials and specifications enabling the optimal use of resources resulting in minimum waste production in property redevelopments. Unsted says L2D’s waste reduction target has made significant progress with waste-diversion rate by weight improving to 75 per cent in February 2022 from 40 per cent in 2021. To meet the global climate change targets, buildings would need to move to net-zero; this requires extremely energy-efficient buildings, says Reynolds. “In South Africa, this means all existing buildings will need to reduce their energy consumption to about one-third of current usage to meet the ambitious goal of all new buildings being net-zero by 2030 and all existing buildings reaching a net-zero target by 2050,” she says.

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IMAGES: SUPPLIED, ISTOCKPHOTO.COM

MANAGING SUSTAINABLE

L2D’s retail assets have between 4–6 green star ratings from the GBCSA, and COVID-19 certification from the Swedish-based Safe Asset Group, demonstrating the company’s push to provide healthy and safe environments for customers. Groves says building green for sustainability is becoming an industry standard, mainly driven by the need to address inadequate energy resources and carbon reduction targets. “Developing buildings aimed at improving occupants’ health and wellbeing is cited as a major trigger driving green building activity,” says Groves.

GREEN BUIL DING S

“FUJIFILM HOLDINGS HAS SET TARGETS TO PRODUCE NET-ZERO CARBON EMISSIONS BY THE END OF ITS MARCH 2041 FINANCIAL YEAR.” – TARO KAWANO

Unveiling Fujifilm’s

green innovation Motion sensors, day/night lighting, energy-efficient plumbing, rainwater harvesting, and solar panel installations are only some of the energy-efficient solutions of this new construction in Sandton, writes DENISE MHLANGA

n March, Fujifilm South Africa turned the first sod of the development of its new head office located on Holt Street, Sandton Johannesburg. Construction is scheduled for completion in December 2022. The five-storey 999m2 building will house Fujifilm South Africa’s head office, a repair centre, and Fujifilm Technology Centre Africa. “Fujifilm Holdings has set targets to produce net-zero carbon emissions by the end of its March 2041 financial year. The construction of the new head office in South Africa is in line with the group’s net-zero target,” says Taro Kawano, Fujifilm South Africa managing director.

The group’s green value climate supply strategy focuses on reducing carbon emissions across the entire product life cycle, from procurement of raw materials to manufacturing, transportation, use and disposal, by 50 per cent by its 2030 financial year. Fujifilm South Africa has appointed green energy experts to help with identifying green elements for the development. However, the company says of the four Holt Street developments, only one of the buildings will be designed green. Unlike many buildings facing onto a main road featuring a glass frontage, this development will have a more solid facade facing toward William Nicol Drive. Kawano says the energy-efficient building will initially include motion sensors and day/ night lighting, energy-efficient plumbing that uses less water, solar panel installations on the building roof and rainwater harvesting. “The Fujifilm Technology Centre Africa will provide demonstration and training for our business units and showcase the latest Fujifilm products to our customers,” says Kawano.

GROWTH OF GREEN BUILDINGS Mitigating the effects of climate change to preserve the planet is a major driver in building green in South Africa’s commercial property sector, writes DENISE MHLANGA

IMAGES: SUPPLIED, ISTOCKPHOTO.COM

he urgent need for decisive and immediate action to mitigate the effects of climate change and to save the planet for future generations is a major driver in building green in South Africa’s commercial property sector. The Green Building Council of South Africa (GBCSA), an industry body that leads the greening of the commercial property sector, has achieved great success not only through the certification of green buildings, but also in promoting green practices to change the built environment. “Over the years, we’ve seen significant commitment from property developers, owners and project teams showing

dedication and a tangible desire to build better buildings,” says Lisa Reynolds, GBCSA CEO. She says green buildings have gained traction in the commercial property sector and will continue to do so due to climate change effects and the global 2050 net-zero carbon target. A net-zero carbon building is highly energy-efficient with the remaining energy requirement generated from renewable energy, preferably on-site, but off-site where absolutely necessary. The GBCSA has partnered with the World Green Building Council and C40 Cities in the race to achieve net-zero carbon for all new buildings by 2030 and all buildings by 2050.

“WE’VE SEEN SIGNIFICANT COMMITMENT FROM PROPERTY DEVELOPERS, OWNERS AND PROJECT TEAMS SHOWING DEDICATION AND A TANGIBLE DESIRE TO BUILD BETTER BUILDINGS.” – LISA REYNOLDS

Reynolds says the built environment and commercial property sector in South Africa fully understands the significant environmental, financial and health benefits associated with green buildings. “Green building benefits are becoming more widely accepted, and tenants are starting to insist on occupying certified green buildings, thus driving demand for those buildings,” says Reynolds. Since 2009, GBCSA has certified 740 buildings, and in 2021 alone, 140 buildings received green certification.

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OCCUPIER SPACE

The Workspace open-plan communal office space.

FLEXIBLE OFFICE SPACE

Hybrid workspaces are trending. ITUMELENG MOGAKI talks to the experts about this and other trends within the sector

ybrid workspaces are gaining popularity in the post-pandemic era, according to The Workspace CEO Beyers Müller. “When flexible office space became a ‘thing’, it was perceived as only fit for freelancers, small businesses, and entrepreneurs. “However, after COVID-19, this perception changed quite dramatically. Even the bigger companies now understand the value of being agile, flexible, and managing risk effectively,” says Müller. He says that the hybrid model allows employers and employees to balance needs, namely, productivity, cost savings, risks, flexibility, and various working environments. In addition, Müller says companies are future-proofing their businesses against the risk (fixed cost) of future pandemics. “Using the hybrid model has lower financial risks because of the flexibility it allows,” says Müller. Joanne Bushell, MD of IWG South Africa, says even though they have seen a massive acceleration in the uptake of hybrid working, there is often a need to work with no distractions such as children, dogs, and vacuum cleaners, as well as have a place to conduct professional meetings. This is where flexible workspace solutions come in, providing an IT infrastructure that far outweighs home networks, while simultaneously cutting down on crippling real estate costs, along with productivity gains and a greater ability to attract talent,” she says. “Employees want to work either at the head offi ce or a fl exible workspace closer to their home to interact with other like-minded

people, avoiding that feeling of isolation,” adds Bushell. “They want the personal productivity benefi ts of living and working how and where they want. “Businesses that opt for a fully equipped workspace often see an immediate halving of their property costs, releasing capital to invest in generating stakeholder value,” she says.

FAST FACT

The 2020 Workforce Sentiment Survey that collected data around employee experience and expectations while working remotely reports that 43 per cent of respondents would consider working from a company-provided location nearer to their home at least a few times a week.

WHAT’S TRENDING?

CHALLENGES AND ADVANTAGES

According to Müller, some of the leading trends in the hybrid workspace environment include: • Short-term office rental agreements, boardroom requests, and day packages are increasingly in high demand. • Some employees enjoy working from the comfort of their homes, but many are returning to the office because they feel isolated and want some form of normality. • Some clients want to see their teams face-to-face at the office (at least) weekly. Müller says: “This remains a priority as it enhances company culture, teamwork, creativity, and recognition.” • Some clients spend two to three days a week at their regular office and the rest at home. • Employers continuously weigh the pros and cons of having employees in the office full-time versus the hybrid model. After evaluating the job function, employers consider which employees need to be office-bound to get the correct focus and performance. “In short, if you find the right flexible office partner, the hybrid workspace model can fit anyone and everyone,” says Müller.

Bushell says the biggest challenge to a hybrid workspace model is co-ordination. “Working in hybrid teams presents significantly more co-ordination challenges than working face-to-face. A culture of trust is essential for managing employees working autonomously and remotely,” she says. “Frequent communication through well-established channels is key. It helps if you have well-thought-out management tools.” Commenting on the advantages, Bushell says that using hybrid workspaces allows companies the financial flexibility to invest in their staff and grow the business, instead of the buildings from which they operate. “In our experience, businesses that opt for a fully equipped workspace, with everything from furniture to super-fast Wi-Fi, have more productive and mentally healther workforces, as employees spend less time travelling to city centres due to the proximity of flexible office spaces to their homes.” In addition, she says companies view addressing the need for their people to commute to work as the single greatest contribution they can make to reducing their carbon footprint. “They understand that by bringing work closer to home, they will immediately and significantly reduce the weight of traffic on roads and in cities across the world,” says Bushell.

“EVEN THE BIGGER COMPANIES NOW UNDERSTAND THE VALUE OF BEING AGILE, FLEXIBLE, AND MANAGING RISK EFFECTIVELY.” – BEYERS MÜLLER 18

IWG’s co-working space.

IMAGES: ISTOCKPHOTO.COM, SUPPLIED

GAINING POPULARITY

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IWG A DV ER T ORI A L

IWG flex-spaces offer uninterrupted power, even during load shedding, and cutting-edge IT infrastructure.

HOPE AND PROMISE The hybrid working model is showing promise and providing hope amid the gloom of load shedding and escalating petrol prices. By JOANNE BUSHELL, managing director, IWG South Africa

IMAGES: SUPPLIED

outh African businesses and citizens face tough times. Businesses suffer a loss in profits during load shedding because generally employees can’t work when there is no power. And, if that is not enough of a challenge, the rising petrol price is debilitating both employees and businesses. PwC estimates that the adverse impact of load shedding in 2021 was a reduction in real gross domestic product growth of up to 3.1 percentage points, costing the economy up to 400 000 potential jobs. And, looking ahead, Eskom’s chief executive said recently that the power utility expects 61 days of load shedding during the April–August period. Not all businesses have the privilege of alternate power supply; some are forced to close their doors because they cannot function or run their businesses as they do not have the infrastructure and security is compromised. Crippling fuel costs are having a dire effect on employees. A study by Regus found that workers could save 960 million hours per year in commuting time by 2030 if they turned to flexible working options. That is a saving of more than 100 million tonnes of CO2. Not only can a shorter journey to work save employees money and boost their wellbeing, but it can also help reduce their carbon footprint, making it a better option for the environment. When working from home, a Zoom meeting can be a nightmare if the space is

unsuitable or if there are interruptions from children and/or animals. And in the South African situation, where load shedding is a regular event, it can be maddening to sit for hours without power to charge a laptop or maintain an internet connection.

IS THERE A SOLUTION? The hybrid working model using flex-space offices is fast becoming a viable solution to mitigate these factors. All you need to do is show up with your laptop and work. The rest is provided. We are seeing employees flock to our flexible workspaces, closer to their homes, to use our setup, designed to maintain power through load shedding. These centres offer much more than just office tools and supplies. They offer a service that improves the way people live; positioning them in suburban centres provides the basis for a simpler work-life balance. In the future, the focus will be on providing flexible local workspaces, as opposed to working from home or a head office that does not have the cutting-edge IT infrastructure a flexible workspace centre offers. Working from home or from a stand-alone office places pressure on a business to ensure that the required infrastructure is in place. And while in ideal operating conditions, it might be possible to do so cost-effectively, the reality of load shedding makes it unsustainable.

IWG offices are fully serviced. All you need to do is show up with your laptop.

Instead of having to invest in backup power or alternative options, the use of a co-working environment alleviates that pressure. At face value, businesses not only get beautifully designed office spaces close to where they live, saving them money on fuel, but also access to amenities, including meeting rooms and uninterruptable internet connectivity. From safe Wi-Fi to video-conferencing facilities, communal kitchens and cost-savings on petrol, co-working environments are becoming a vital component of ensuring a business’ longevity during these trying times. The convenience and confidence of being able to work during load shedding has made the hybrid work model and flex-space a practical solution in our already struggling economy. Providing business owners with the peace of mind that they can remain focused on doing what they do best, means that co-working spaces will grow in popularity and contribute to the growth of the country’s business sector.

➔ Scan this QR code to go directly to the Regus website.

For more information:

We are seeing employees flock to our flexible workspaces, closer to their homes, to use our setup, designed to maintain power through load shedding.

021 300 4366 www.regus.com RegusGlobal iwg-plc

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INSIGH T S

TURNING PROPERTY INTO PROSPERITY IN 2022 South Africa’s property market has been sluggish over the past five years, but is starting to show encouraging signs of improvement, shares BHEKI VILAKAZI, managing director of SVA International, a subsidiary of the GIBB Group of companies to be low, many workers are expected to return to their offices this year. However, the numbers are unlikely to return to those seen before lockdown. In the retail sector, a significant increase in online shopping has led to reduced footfall in shopping centres and a reduced need for retail space. Retail property made something of a comeback in 2021, however, and its total returns last year likely outperformed those of

RETAIL CENTRES COULD FOCUS MORE ON HIGH-FREQUENCY ESSENTIALS AND LESS ON LUXURIES AND LOW-FREQUENCY PURCHASES.

REVITALISED INNER CITY DEVELOPMENT JUSTINE ADRIAANZEN, commercial real estate consultant for Galetti Corporate Real Estate, shares how the under-35s are reclaiming SA’s inner cities

he renewed interest in the country’s major CBDs from a younger demographic will have a positive knock-on effect on the economy and property market at large. This unusual demographic has moved in to take their place and revitalise the CBD. Younger millennials and Gen Zs aged between 20 and 35 typically have more disposable income and therefore greater spending power, and they are choosing to inject that cash into the inner city. Property developers are capitalising on this new market by converting old and/or abandoned buildings into trendy mixed-use developments. More local businesses such as clothing boutiques, homeware stores, artisanal retailers, upmarket bars and restaurants are now opening to cater to these residents and office tenants. Renewed investment and activity Justine Adriaanzen have also motivated city

officials to ramp up crime prevention to revitalise key CBDs – such as the launch of Operation Buya Mthetho, which has deployed 1 800 JMPD officers to help fight crime in the Johannesburg CBD. Cape Town CBD is most in demand. Two decades of dedicated improvements have paid off as the valuation of property in the CBD now stands at more than R44-billion – up from just R6-billion in 2000. New developments such as The Rubik by Abland Property Developers and refurbishments such as One Thibault, East City, Neighbourgood’s all-inclusive living and co-working buildings and The Barracks are specifically designed to appeal to millennials and Gen Zs. These are set to see increased demand as semigration continues to gain traction. Johannesburg CBD has struggled to reclaim its former glory, however, Johannesburg CBD neighbourhoods

Bheki Vilakasi

office property, but underperformed those of industrial property. In a financially constrained consumer environment, however, retail centres could focus more on high-frequency essentials and less on luxuries and low-frequency purchases. The industrial property market remains the relative outperformer of the major commercial property classes and is expected to continue its positive performance. This is amplified by an increased demand for warehousing space, due to the online shopping surge.

Maboneng and Braamfontein have established themselves as a haven for creatives and movers-and-shakers with popular food and craft markets and art galleries. The success of apartment buildings in these areas such as Sontonga Lofts and Jewel City indicates that there are still opportunities for investors to lure young South Africans back to the inner city. Johannesburg CBD recently received a cash injection from eight of the country’s biggest private investors, including Absa, Standard Bank, FNB, Atterbury and Olitzki Property Holdings. These business giants are upgrading retail inner-city districts by paying for security, cleaning, and maintenance in the area.

WHY ARE INNER CITIES BECOMING SO POPULAR? Factors influencing the millennial move to the inner cities include: • proximity to offices and public transport • trendy restaurants and bars • on-site lifestyle amenities • modern design • noise prevention and safety.

YOUNGER MILLENNIALS AND GEN ZS AGED BETWEEN 20 AND 35 TYPICALLY HAVE MORE DISPOSABLE INCOME AND THEREFORE GREATER SPENDING POWER, AND THEY ARE CHOOSING TO INJECT THAT CASH INTO THE INNER CITY.

IMAGES: ISTOCKPHOTO.COM, SUPPLIED

he hotel industry took a big hit in 2020 and 2021. Travel bans due to lockdown restrictions reduced the number of local travellers as well as visitors to the country, dealing a hefty blow to the leisure and hospitality property sector. This, however, is expected to improve in 2022, with increased hotel occupancy levels. In terms of office space, while occupancy dropped during lockdown and has continued

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