Vacancy rates in South Africa’s retail spaces are declining – but weak economic growth and high interest rates will cause these improvements to stall.<\/p>\n\n\n\n
According to the Q1 2024 FNB Property Broker Survey, the aggregated response showed that vacancy rates in all three commercial property classes\u2014office, Industrial, and Retail\u2014dropped.<\/p>\n\n\n\n
“This is interesting because it points to business sector expansions at a time when the economy has been coming under significant pressure from a combination of a slower global economy and significantly higher interest rates compared to just over a year ago,” said FNB Property Strategist John Loos. <\/p>\n\n\n\n
“Economic growth slowed to 0.6% in 2023, from 1.9% in 2022. But while there is the issue of renewed economic growth slowdown last year, along with higher interest rates, working against these negatives has been the lagged positive effect of a normalisation of economic life after Covid-19 lockdowns.”<\/p>\n\n\n\n
The improvement in vacancy rates could be partially due to the positive normalisation feeding through into the numbers. <\/p>\n\n\n\n
The Industrial Sector’s Index for Direction of Change in Vacancy Rate returned a negative value of -51, implying that 51% of respondents reported a declining vacancy rate compared with those who saw an increase.<\/p>\n\n\n\n
The Retail Property Sector’s Index level also remained in negative (improving) territory. <\/p>\n\n\n\n
It recorded a -65 reading, a mild lessening from Q4 2023’s -76, which still reflects a very significant broker perception of declining retail vacancy rates. <\/p>\n\n\n
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