The Future of South Africa's CBDs
Category Commercial Property News
Central Business Districts (CBDs) across the country have been in a state of flux in recent years, and are now facing even more rapid changes, accelerated by the COVID-19 pandemic and subsequent shifts in the property environment. In fact, the pandemic is, in many ways, accelerating trends that had already begun to subtly transform our CBDs with a greater mix of uses.
How will CBDs meet these new challenges? By embracing the opportunities that arise from the new work environment and moving towards mixed-use spaces, according to the team at Office Place.
The changing Business landscape
While the global pandemic, now in its 11th month in South Africa, has fast-tracked the WFH (Work-from-Home) ideology that many businesses have grappled with for some time, more dramatic shifts are expected to the traditional office environment in the years to come.
Business, along with its employees, entrepreneurs, freelancers and contractors have increasingly been seeking something different from corporate real estate over the past few years: flexibility.
ITWeb reported that "the global flexible, co-working and shared office market accounted for five percent of all office space, having shown 15 percent year-on-year growth over the past five years. The co-working and shared office market will start to exceed this number from 2021, with industry experts anticipating an annual growth rate of 21.3%".
The "new normal" is flexibility
According to the Gensler Research Institute's "City Pulse Survey" on cities like New York, San Francisco, London, and Singapore, people's experience of urban life is changing. As economies started to reopen, people wanted to resume activities in person again, where virtual alternatives couldn't compare.
Humans are social beings who need interaction to remain productive and positive. The Gensler study underlines this need, illustrating how, on a scale of activities people were at ease returning to, 'returning to work' was one of the areas with most positive sentiment.
In South Africa, especially, many people simply haven't got a home set-up conducive to long-term productivity, exacerbated by concerns around childcare, with the closure of schools. High data costs also play a significant role for South African workers wanting to opt out of WFH, at least full time. A recent survey by Giant Leap, one of South Africa' largest workplace consultancies, revealed that 86% of people wanted to go back to working in an office.
So, as businesses embrace remote working or hybrid-working models, shared office space, flexible working spaces, "hot desking" and peer-to-peer sharing of commercial office space are gaining traction. These flexible office solutions, which offer more bespoke opportunities, are what many business owners are now moving towards.
The residential shift
Although a CBD is a dense, globally connected area that often serves as the center point for regional transportation systems, most CBDs are imbalanced and weighted towards core commercial uses and business functions.
However, with the increased emphasis placed on a work-life balance, more workers - especially the younger generations in SA, for whom a vibrant night-life and booming local economy are important - are looking to move into CBDs in order to avoid endless time spent of the road in traffic and lower their daily expenses such as petrol or transportation costs.
In his State of the Nation address in 2019 President Cyril Ramaphosa revealed that 70 percent of South Africans are going to be living in the urban areas by 2030. So the question remains: how do we adapt our CBDs to not only cope, but to become desirable locations for all?
The recent changes on CBD-based industry, residential and business operations offers a unique, once-in-a-generation opportunity to re-imagine and reset the traditional CBD and their relationship to the city at large. "We can use this moment to imagine a new model for growth, one that is more inclusive, resilient, sustainable, and healthy. Underpinning this rebalancing are the foundational issues of affordability, jobs, talent, and the economics of real estate" according to Gensler.
So, what is the future of South Africa's CBDs?
The draft National Spacial Development Framework (NSDF) was published for public comment last year, with ambitious 2050 vision for SA's cities: "By 2050, South African cities - including the likes of Polokwane and Pietermaritzburg - can feature rooftops used either for food production or entertainment such as poetry nights, plays, and pop-up music performances."
Inner city regeneration is a large focus for municipalities, as we've seen in Joburg's inner city revival (read more about that here). Lower rents and property values can make cities more accessible and affordable to locals, with the opportunity to create more walkable "20-minute neighbourhoods" - Similar to what we're seeing in Cape Town and Joburg's Maboneng.
The future of CBD's lies in the ability to change their focus to accommodate a more fluid and flexible way of working and living. With the anticipated continued reform of the corporate office space, government has laid out plans for smart cities and inner-city multi-use parks that will facilitate and enhance to the work-life balance the younger, urban generation are striving for.
This means more residential and pedestrian-oriented uses and more green spaces. Lower rents can also attract innovation, local startups, not-for-profits, small businesses, community partnerships, makerspaces, and local manufacturing. According to this Business Insider article,
This offers great opportunity in the South African commercial property sector - the demand for office space will always be there, but the key is adaptability. Entrepreneurs and businesses are looking for tailored solutions - a cookie-cutter approach is simply no longer acceptable. Now more than ever, affordability takes centre stage in all aspects of life and business.
The future of multi-use, ubanised cities and CBDs looks extremely bright, with the promise of business and lifestyle meeting in one place. CBDs will have to move from being non-resilient and mono-use properties to mixed-use developments including manufacturing and urban farms, as well as luxury and affordable housing. With this change, CBDs will gain the advantage to lure a mix of residents including families, who can help build a community and an identity that CBDs generally lack now.
Where city centres are now "lifeless and boring", they will by 2050 be "hives of activity", according to the plans outlined by government.
Are you looking for a bespoke office solution to meet the needs to our changing business landscape? The team of specialist brokers can help. From flexible, shared and serviced office solutions, to assisting with landlord negations, our team are your future-forward partners in office solutions.
Contact one of our knowledgeable brokers at OfficePlace or follow us on social media for weekly updates.
Author: OfficePlace