Real Estate Investor Magazine South Africa Dec/Jan 2016/17 | Page 33

turn the focus to a growing, important but often
neglected segment of the market: the country’s
small and micro enterprises, and emergent
entrepreneurs. It is estimated that by 2030, no
less than 90% of new jobs will be created by small
and expanding firms. Thus, a huge opportunity
exists to offer solutions to real estate products and
solutions to new company start-ups for relatively
young and small businesses. This segment of the
market comprises 2,8 million businesses that are
responsible for 52% – 57% of South Africa’s GDP.
Landlords and tenants in South Africa are
effectively placed between a knowledge-intensive
economy, which permits development of the smart
city and the shadow or sharing economy, which
is a direct result of slower economic growth and
a response to neoliberal economic globalization.
If we are committed to smaller and microenterprises, there will be a greater demand for
shared space, f lexible office work spaces and a
mix of fixed and variable spaces from tenants.
Furthermore, a lease agreement will become
more layered with arrangements for f lexible space
to meet either peak demands or for meeting the
needs of short-term special projects.
Importantly, this requires a new model
of design and lettable space: new or existing
office developments will need to be forged with
design principles of incubation centres, startup innovation labs and f lexible work spaces in
mind. These spaces are productivity sites and are
purpose-built for the sharing economy, as they
will create opportunities for people to interact and
collaborate in creative ways. Thus, the future of
commercial real estate in terms of office space will
definitely borrow from centres with shared and
communal resources.
In such a configuration, landlords and tenants
will need to approach and be more open to
more f lexible arrangements. Of course, a major
challenge for landlords and facility managers is
the challenge of vetting companies that are in
start-up or relatively young, but yet the lifeblood
of the economy and commercial real estate in the
future. This will in all probably result to higher
rentals as part of the risk management for property
owners and will likely affect pricing dynamics in
the future.
Secondly, real estate owners and facility
managers have to invest in evolving technologies
that can improve interactions with tenants and
customers if they are committed to offer smart real
estate solutions for the smart city.
This will require putting technology strategies
in place for newly built or existing real estate
assets. Investment in technologies to obtain,
manage and exploit can offer rich information
layers for the management of buildings to control
www.reimag.co.za

or reduce operational costs. It will find its way
into facilities management at an operational and
strategic level. Investment and exploration of new
technologies is important not only for the core
business, but also as part of change management
and innovation. Effectively such investments are
important for change but also as a possible valueadded service for clients and tenants.
Thirdly, tech and creative economies are
spreading to emerging market cities like wild
fire. In fact, the technology and innovation are
the lifeblood of economic growth for the future.
For the economies of regional municipalities, it
is critical that commercial real estate planning
and development are anchored in a social-centric
paradigm. This means that office spaces with
facilities and amenities that support the wellness
of its social capital can unleash productivity,
increase levels of profitability and exceptional
innovation.
Fourthly, we should expect a drastic overhaul
of urban retail spaces in the distant future. As
we have seen in South Africa recently, major
retailers are shutting downsizing and shutting
the doors of their presences in the real world and
some are opting to move to online spaces. The
result of this is that brick-and-mortar stores and
physical shopping malls are being reimagined as
experiential sites. Thus, malls of the future will
focus more on mixed-use experiences.
Clearly, a compelling vision, clear road map
and creativity are required to build Africa’s urban
utopias of the future.
And, while smart city planning and development
is often led by municipalities and development
in response to pressures such as increased
urbanisation, city management, challenges,
rising population and climate change, amongst
other, role-players such as commercial real estate
developers, investors and facility managers
through smart commercial real estate planning,
development, investment and upgrading, should
also take part in laying the foundation of future
cities.
• Overlooked small and micro enterprises represents
untapped and underserviced market segment
• Knowledge-intensive and shadow economies configuring
demand to shared spaces
• Successful commercial property investors and owners will
implement technology strategies
• Retail may be overhauled in urban centres in distant
future

RESOURCES
Afri-Corp International Properties
DEC/JAN 2016 SA Real Estate Investor

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