Growthpoint, South Africa’s largest listed property company, said on Thursday that while it is seeing renewed interest in occupying offices, the sector remains the most challenging in its portfolio, particularly in Gauteng, the country’s economic hub.
The group attributed this to a trend of hybrid working that emerged with the advent of Covid-19.
Growthpoint, which is worth more than R42-billion on the JSE, said the pace of consolidation continues to be a trend for large tenants.
However, it said it has successfully let about 46 000m² of new space, “signaling that smaller businesses are returning to offices with hybrid solutions”.
Staff occupancies at many of its offices are now up to 70%.
“Offices in coastal regions continue to outperform. Rosebank, Woodmead and Illovo have seen good letting with a reduction in vacancies, even though offices in Gauteng are particularly stressed,” the company said.
“The pressure is most evident in Sandton, where we have 21.5% of our office gross lettable area. Sandton vacancies seem to have peaked and remained steady at 27%. We are retaining a high percentage of tenants, but some have downsized, impacting the numbers. The renewal success rate improved to 61.2% from 58%.”
It added that its retail sector is showing strong signs of recovery with turnovers at pre-Covid-19 levels at most of its shopping centres.
“Our community shopping centres remain robust, and it is pleasing to see that our regional centres continue to recover.
“While the recovery in apparel was led by value fashion, we are now seeing a recovery across all fashion categories, whilst the performance of retailers selling essentials remains strong and consistent.”
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