Johannesburg Office and Industrial Trends for 2020
Category Commercial and Industrial News
With 2020 well underway, plenty of reports have been released describing the state of affairs around South Africa's commercial and industrial sectors. A common thread running through these reports is indications that GDP growth will be lower than 1.5% this year. Experts say that power cuts will play a key role in hampering progress, and negative public debt will reduce investor confidence both locally and internationally.
These are just some of the challenges facing the country's growth. However, when you place a magnifying glass on individual provinces and cities, a different outlook comes to light. Certain regions are emerging as strong market leaders that defy national shortfalls to a certain extent.
In this article, we will unpack the commercial and industrial trends expected for Gauteng this year, with a focus on Johannesburg. This city has the largest municipal economy in the country, which means that the trends emerging from here will have a tremendous effect on the national economy as a whole.
Johannesburg's place in the national economy is formidable. It accounts for approximately a third of South Africa's economy and provides jobs for over four million residents. Besides being the location of the largest stock exchange in Africa - the JSE - it is also home to a host of blue-chip companies.
1. Investments
Gauteng has always dominated investment activity, consistently outperforming other significant provinces such as the Western Cape and KwaZulu-Natal. For example; in 2017, commercial investments in Gauteng were R3,1bn, and in 2018 this jumped to an incredible R11,3bn. In the same period, the Western Cape recorded only a marginal increase of 15%, while KZN showed a decline. Investments in Gauteng's industrial sector more than doubled during this period, to R2.4bn.
As we start a new year, we can expect to see similar levels of investment activity. Continued investor confidence will drive the development pipeline into the future.
2. The Development Pipeline
Johannesburg is a popular place to invest in, and, unsurprisingly, the development pipeline for 2020 and beyond is significant. The healthy developer interest in the city will lead to around 292,092sqm of new office space and around 304,799sqm of new industrial space. The past few years have seen development spikes in the office space sphere. In 2020, however, new developments will slow down due to two factors: high vacancy rates and a stock oversupply.
These factors exist thanks to the high rate of development seen in previous years. Thanks to a slow-down, we can expect to see vacancy rates dropping and supply levels returning to normal this year.
On the industrial side, 2020 can expect an increase in speculative developments, which means that developers investing in Johannesburg have a positive outlook about the sector. As such, in 2020, the market will see many new industrial parks coming to the fore - especially light-industrial developments.
3. Where is Development Taking Place?
As expected, the prime locations for new office developments are Rosebank, Sandton and Waterfall. Interest in these areas is showing no signs of slowing down, but it is interesting to note that new development projects have been announced for the CBD and eastern Johannesburg. Due to the availability of land for development, as well as locational advantages, these two regions will see massive transformation in the next few years.
4. New Developments
There are many new developments that investors and occupiers are keeping an eye out for in the new year. When it comes to commercial properties, these include Sandton Gate (phase 1), Advocates and 144 Oxford. The biggest industrial developments to look out for are Westlake View, Samrand Circle and Ashworth Logistics Park.
2020 will see Johannesburg continue to cement its position as the leader in South Africa's economy, despite the ups and downs being experienced throughout the country.
Author: 3CUBE Property Solutions
