Work-from-home faces mounting pressure in South Africa

Work from home is being hampered by heightened load shedding, pushing more people back into the office.

FNB’s latest commercial property broker survey for the first quarter of 2023 showed that sales activity expectations weakened in both the industrial (13.56) and retail property (11.12) classes compared to the quarter before; however, the office sector was a major outlier.

FNB reported that respondents forming part of the Office Property Market Activity saw a positive reading at +29.04.

The report serves as an indicator of expected sales activity levels in the next six months; FNB compiles the index, allocating a score of +1 to each percentage point’s worth of “increase” responses, zero to that of “unchanged” responses and -1 for that of “decrease” responses. The index is thus on a scale of -100 to +100.

According to John Loos, the bank’s head commercial property strategist, the office property market’s performance was interesting as it has been the weakest of the three compared markets for some time.

Loos said that the work-from-home impact on office space downscaling is still perceived as significant but is being hampered recently by load shedding.

Previous surveys conducted by FNB found that, in general, there was a far bigger portion of respondents who believed that greater levels of remote work would reduce office space needs. Elevated load-shedding levels have cast doubt on that belief, said Loos.

Loos added that in the first quarter, the office property component showed 38.71% of respondents citing some form of “effects of Covid-19” as a key factor driving their activity expectations, mainly surrounding the remote work issue.

“The biggest portion of this Covid-related response is the 20.97% of respondents believing that many businesses are re-evaluating their office space needs and downsizing their space due to the increased level of remote work compared with pre-lockdown days,” said Loos.

“A lesser 14.52% of respondents, however, believe that employees returning to the office may drive increased office space needs. In addition, the remote work issue crops up again under “Changing trading conditions”, where 11.29% of respondents point to electricity load shedding as preventing effective working from home,” said the property strategist.

In January, Linda Trim, the director at workplace design firm Giant Leap said that South African companies might start seeing a reversal of the work-from-home trend that has embedded itself in workplaces across the country – with load shedding to blame or praise.

“The reality is people who have enjoyed working from home may simply have little choice but to return to the office,” Trim said. “Few people have the resources and patience to try and complete a full work day with no power for big blocks of the day.”

Other sectors

The retail property market, according to Loos, is still being challenged by an evergrowing online shopping market, while a weak economy contributes to low levels of consumer demand.

Brokers for the retail market are the least optimistic, returning to a low positive reading of 11.12, down from the prior quarter’s 22.92.

The industrial and warehouse market has been relatively strong. However, there are a handful of stock-related issues. The near-term reading of 13.56 is down from 19.05 in the prior quarter.

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