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Commercial Properties to Rent

2017-04-11

How Rapid Urbanisation and Sustainability Affect the Commercial Properties of the Future

Extensive social and economic transformation across the world is expected over the next few years in line with the United Nation’s development plan Agenda 21. The National Planning Committee of South Africa developed the 2030 Vision for South Africa, reflective of the need to address climate change, globalisation and increase in urbanisation issues. Sustainability and mega trends in the property sector came under discussion at the First Annual Real Estate PriceWaterhouseCoopers (PWC) Conference hosted about two years ago. The focus of the conference was on the outlook for real estate investment by 2020. 

When looking at the subject matter of the conference, as well as recent studies and the overall predictions made by experts in the industry, it becomes clear that the commercial properties to rent in future will be more energy-efficient, incorporating passive design principles with efficient technologies to minimise impact on the environment and improve the quality of the work spaces.    

Though office rentals remain under pressure with high vacancy rates, the retail property sector has outperformed many sectors in the economy over the past two decades, and there is no reason to believe that the investment in the real estate sector will be reduced in future. The expectation is that the property sector will perform well even though the economic slowdown has stunted growth recently. Estimates show that worldwide stock of commercial real estate will reach over 45 trillion USD by the year 2020.

Factors that drive sustainability and will become a priority in commercial real estate include the concern about climate change impact and an increase in energy costs. Taking note of the global trends that will shape the future of real estate investment and development has become important for current property developers and investment trusts.

Rapid urbanisation is taking place across the globe, but even faster large-scale movement to urban areas is expected to start in the next four years with cities in the developing world to grow the fastest. Such population migrations will increase the demand for housing, infrastructure, and commercial properties to rent. Though in the developing countries the increasing need for housing in the urban areas will become more apparent, specialised real estate needs such as office blocks, industrial warehouses, retail centres and campuses will take priority in the more developed economies.

Building designs will reflect the focus on sustainability and this trend is already apparent in South Africa. Green spaces are incorporated into the designs of the buildings and office parks with design principles including the use of rainwater harvesting to flush toilets, the positioning of windows for maximising natural sunlight utilisation, the creation of open spaces to improve communication abilities and shared usage of resources. Mall designs also reflect these principles. Though consumers are becoming more technologically savvy, they still want physical stores and retail centres will therefore remain important, but the growth in online shopping also means an increased need for warehouse commercial properties to rent for the storage of consumer goods.

Redefine is one of the top real estate property companies that aim to ensure more sustainable commercial properties are available to rent with the aim of obtaining 4-star Green Star Building status for all the new commercial properties in our portfolio.

Technology is another driver of change in the sector. Forming a major part of the way people interact and do business, it is expected to play an even bigger role in future. Businesses are focussing on digital solutions and commercial properties need to address technology needs of tenants. With technology advancements, employees can work from mobile devices anywhere in the world. The need for dedicated employee spaces is therefore dwindling. More interaction among employees, smaller spaces required because many work from home rather than at office, meeting spaces and the likes must be addressed.

More efficient usage of floor space is expected, which means that the floor space required per employee in future will be less than that needed a few years ago. This trend is already noticeable. Companies at present only require around 8-10m2 per office employee, whereas in the past they used about 18-20m2 per employee. To stay competitive, companies offering commercial properties to rent will have to address issues of energy-efficiency, flexibility, technology applications, warehousing requirements, and well-selected locations.