One of South Africa’s biggest property groups spoke to its clients about their return to office strategies – here’s what they said

 ·16 Jun 2022

The future of office space has become a highly debated topic since the pandemic saw millions of workers worldwide set up their offices at home, says Growthpoint Properties, South Africa’s largest domestic office landlord with 161 domestic properties.

Two years later, more than half of the global population has been fully vaccinated against the virus. “A return to the office is inevitable, if not already a reality for many, but how has the traditional workspace changed?

“Employees have significantly benefitted from the flexibility that working from home offers, and it’s not likely something they will want to lose. Equally compelling for them, however, is the need to engage with colleagues in person on a regular basis,” it said in a recent blog post.

Growthpoint said earlier this week, in a trading update, that key metrics for its retail and industrial portfolios are showing signs of improvement, but its office portfolio remains under pressure.

The company is the largest South African primary REIT (Real Estate Investment Trust) listed on the JSE Its office properties are valued at R27.4 billion with a gross leasable area of 1.7 million sqm. Its top 10 tenants include Discovery Holdings, Anglo American, Transnet, Allied Electronics Corporation, Absa Bank, Exxaro Resources and Investec Bank.

The office sector, Growthpoint said, remains the most challenging of its three domestic businesses, “but we are seeing some sporadic green shoots”.

“Economic imperatives are driving some companies to reduce their office spaces, and work-from-home routines are creating uncertainty about future space requirements. The good news is that the initial sentiment that offices would no longer be needed is receding with hybrid working patterns set to endure.

“Bigger businesses are returning their staff to offices with different strategies, some fully with others are still on a rotational system. We have started to see smaller tenants that previously vacated their offices return to the market,” the property firm said.

Growthpoint said that the office sector is particularly stressed in Gauteng and Sandton specifically, although it expects this business and financial hub to recover in due course.

Interestingly it noted that the average lease renewal term decreased to 2.8 years from 4.4 years at FY21 and 3.8 years at HY22, as tenants remain reluctant to commit amid uncertainty.

“What these numbers do not reflect, however, is how uncertainty is driving positive tenant retention because businesses are unwilling to relocate until they have more clarity on their future space needs. While we are retaining a high percentage of tenants, some have downsized, skewing the numbers.”

Future of work

In conversation with its clients, Growthpoint said that it is seeing different dynamics. “Technology has made it easy for people to work remotely, and staff save on the time and cost of travelling. But not all staff have access to ideal working environments at home or standby power in the case of outages. At the same time, they still miss their office environment and the social interaction that comes with it,” it said.

Although many companies are still uncertain of their future working arrangements, the hybrid model appears the be a front runner for now, the group said.

“More than just a space to work, collaborate and interact with colleagues, office space plays an undeniably vital role in building and maintaining company culture. Working remotely may still work for existing client relationships, but it is hard to establish those relationships with new clients in a virtual setting.”

Growthpoint said it also anticipates that the changes brought on by the pandemic will influence some of the outdated preconceptions we have about what this space should offer. “Historically, a high parking ratio has been preferable, but in the future, we may be able to use our resources more effectively and provide other amenities that are more important,” it said.

“In terms of vacancies, we are seeing that nodes exposed to an oversupply of office space have been most affected. There may be a demand for nodes closer to residential areas, where people can work closer to home.”

Other trends Growthpoint says it expects to see in the coming years:

Unassigned seats

A trend already in play before Covid-19, hot-desking does away with the traditional personal working space, and instead, employees choose where to sit every day on a first-come-first-served basis. Hot desking disrupted old-fashioned office designs by including different co-working zones such as think spaces, and this trend is only going to become more popular.

Strict sanitation

Companies will need to make it easier for employees to maintain proper hygiene in the COVID-19 era. This may mean adding sinks in kitchens and break rooms or placing multiple hand sanitiser dispensers in key places around the office. In cases where desks are not assigned, employers may consider assigning lockers, file drawers, or cabinets to their staff.

Touchless technology

The implementation of hands-free technology will limit surface touching and the risk of spreading a virus in the workplace. Hands-free technology includes everything from touchless check-in solutions for visitors or access control points like doorways, turnstiles, or elevators in a building.

Smart, green buildings

Green buildings already prioritise the Indoor Environmental Quality of a building, and this aspect has become even more important, particularly indoor air quality. Offices of the future will need to ventilate better with outdoor air to dilute airborne contaminants and lower transmission opportunities.

In May, Growthpoint switched on the solar panels at Montclare Place in Cape Town. “With nine hundred and twenty-six 540 watt panels installed, our clients can look forward to enjoying solar energy generation of up to 736,646Kwh for the first year.”

On top of the savings on energy bills, it also equates to 780,884.76 tonnes of carbon that won’t be emitted into the atmosphere, it said.  “And if you’re not sure how much carbon that is, driving a diesel car for over 4 billion km, or 6000 round trips to the moon, would produce the same footprint.”

Read: Joburg wants to introduce a 24-hour work day to boost jobs and economic growth

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