Almost no commercial property sector in the world has not been impacted on by the pandemic, with many African cities struggling with high vacancy rates.
There are, however, positive signs of a rebound, says commercial and industrial real estate company Swindon Property in its first 'African Cities Insights' report, which covered the second quarter of this year.
The report shares local insights, trends and investment opportunities in sub-Saharan African markets.
This report includes five cities – Lagos, Nigeria; Nairobi, Kenya; Accra, Ghana; Luanda, Angola and Windhoek, Namibia.
Swindon sub-Saharan Africa client advisory lead Geoff Kruger reveals that, since the company launched operations in these markets just over a year ago, it has noted many of the same trends taking place across the continent.
With far fewer international clients entering the office market, the report suggests that most of the leasing activity is coming from space reductions by existing tenants.
Landlords are more willing to grant extended rent-free periods of up to six months and more, rather than offering prospective tenants a fit-out allowance, which has become in demand versus the shell and core option owing to budget constraints.
“We’ve noted that larger companies using the hybrid approach have relinquished on average between 2 000 m2 to 5 000 m2 of their office space, putting much pressure on landlords.
"Yet, interestingly, against the trend, is an 8 000 m2 office expansion in Lagos, Nigeria, which we negotiated and concluded for Microsoft, highlighting the demand for good-quality, flexible office space in the region. But across the board office rental rates have decreased,” says Kruger.
In terms of the industrial sector, the report indicates higher demand for warehousing space, even though there is less demand for retail space, possibly owing to an increase in online shopping.
The biggest trend by far can be seen at shopping malls. Most retail outlets have reduced their floorspace and while fewer people are visiting malls, there is a notable increase in strip malls, especially in Nairobi, Kenya, as it seems to offer easier access with less security checks.
Big retailers like Shoprite have exited Nigeria opening the door for Pick n Pay, South Africa’s second largest retailer by market cap, to make its long-anticipated entry into the country.
“As mass vaccination programmes roll out and pandemic restrictions begin to ease, we should see investor confidence returning to the sub-Saharan Africa region bringing with it an increase in rental enquiries in all property sectors.
"The oversupply of B-grade offices opens many opportunities for tenants to get the properties they desire at a competitive price,” concludes Kruger.