It’s unlikely that many shiny, imposing super structure offices are likely to be built in SA over the next five years. This is as South Africa struggles through the 2020s. Since the 2009-9 recession, South Africa’s economy has unimpressed. There were cases where multinational professional service providers including law and accountancy firms asked large landlords to build them swanky offices but eventually the momentum lapsed.
Initially, some legal firms even used funds which they had earned providing legal advice to the likes of former South African President Jacob Zuma and other powerful politicians accused of criminality, for rental and outfitting. Large law firms have also charged corporations such as Tiger Brands and Steinhoff, fortunes to defend them during scandals and then been able to afford renting impressive energy efficient offices.
Accounting firms provided advisory advice to dubious companies. It’s also often the style of law, accountancy and other professional firms to want to occupy buildings which enable them to show off, if you will. A company may be more likely to use the services of a firm which has a beautiful office than one which operates out of a modest house or a shared office space.
But suddenly we weren’t seeing many of the likes of Norton Rose Fulbright and Bowmans which both have offices on Alice Lane in Sandton, wanting to occupy the best in office space in top-class central business district (CBD)s such as Sandton and Cape Town’s V&A Waterfront. In 2020, the world was engulfed by a pandemic and people were forced to work from home. Soon some of the most skilled office workers realised that they really didn’t need to work in an office anymore. They wouldn’t be stuck in traffic on the way to meetings and could be more productive. The lockdown then continued into 2021, placing more pressure on developers who needed to build large offices to keep their businesses going.
Interestingly enough, when Alistair Anderson toured Growthpoint Properties’ office development in Rosebank, 144 Oxford back in June 2019, the listed real estate investment trust (Reit)’s management expressed that it was highly unlikely that a slew of new offices would be built for years.
Growthpoint’s SA CEO Estienne de Klerk said the 38,000m² office complex, worth more R1bn, would be “built on spec”, but the company’s other developments to be built in 2020 and 2021, would be designed to suit specific tenants’ needs, he said.
Property groups were avoiding building speculative developments while the economy was at its weakest point in more than a decade in 2019. The economy is now seemingly at an even worse point.
When things improve, which is highly unclear to predict, given that the war in Ukraine is also placing pressure on our economy and our energy crisis is harrowing with no plan to solve it yet provided by the government, of course there will new office developments in the country. Working from home suits certain jobs and businesses but it doesn’t suit an entire economy, which needs to employ or support millions of people.
We wait with worry for things to improve, and those of us who are employed or running profitable businesses, appreciate what we have.
Photo courtesy of Tiber Group Properties, a subsidiary of Growthpoint Properties