The office sector is showing clear signs of recovery, particularly at the high end, as indicated by the latest survey from South Africa's largest commercial property association, which reported eight consecutive quarters of declining vacancies.
The South African Property Owners' Association (SAPOA) released its latest office vacancy survey, highlighting that while improvements have impacted rental growth, asking rents increased by 0.8% in the three months ending June.
Although still below inflation, this could signal that demand is closer to supply levels not seen since before the pandemic, the association noted.
According to SAPOA, the overall office vacancy rate for the second quarter of 2024 was 14.2%, a 0.5 percentage point decrease from its peak of 16.7% in the second quarter of 2022.
The survey included 2,703 completed office properties and 10 active developments across 54 areas, covering a total of 19.2 million square meters of gross lettable area.
The improving vacancy trend was also supported by limited new development activity, which could help stabilise the market to a new equilibrium.
The second quarter of 2024 saw improved vacancy rates for new prime office buildings and older A- and B-grade offices, while lower-quality C-grade offices experienced a 0.3 percentage point increase in vacancies.
Prime, or P-grade, offices saw the largest improvement, with the vacancy rate decreasing by 1.6 percentage points to 7.8%.
Johannesburg, South Africa's economic hub, recorded the highest office vacancy rate of 16.9% in the second quarter, an improvement from 19.5% in the same period of 2022 but still higher than the 12.5% recorded in 2019.
Cape Town had the lowest overall office vacancy rate at 6.3%, following a 0.5 percentage point improvement, marking a 15-year low.
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