The current economic situation being experienced in South Africa is putting pressure on the commercial property industry, with rising vacancies across the board. “Indeed some commentators have noted it is one of the toughest property sector environments in two decades,” notes Gregg Huntingford, CEO of Spire Property Management.
However, it is not all bad news.
According to St John Gardner, Executive Director of Spire Property Management, through strategic planning and the introduction of an innovative letting stimulus package, Spire has managed to buck the trend and is seeing reduced vacancies across ALL sectors, in contrast to the majority of the industry.
Following the acquisition of the properties, Spire’s vacancies in the industrial property sector have gone from over 10% to be below 2%. Retail vacancies have also enjoyed an improvement, particularly in the community centre genre, and have gone from approximately 4% to less than 1%, whilst store vacancies remain unchanged at a very low sub-1% level. Office vacancies sit at the 2% mark, having seen an improvement from nearly 5% in November 2017.
Gardner goes on to advise that Spire’s letting stimulus package targeting stubborn vacancies and restructured rental deals, aptly named “free@spire” has seen great reception with tenants and landlords alike.
“There have been many ways to address rental structuring. For instance, for certain properties we offer a Rent Free December, allowing for businesses’ cash flow constraints over December – when bonuses need to be paid, staff go on leave, and offices close for a large period of the month. Not having to pay rent for the month can be a huge financial relief for these businesses, and because the property runs with lesser operating costs in that month it is viable all round. It is all about understanding the needs of all the building stakeholders.”
“We also offer longer competitive rent-free periods which can be staggered through the lease period for certain properties, in a fashion that aids owner and tenant alike,” says Gardner.
In addition to the above, Gardner advises that Spire’s letting strategies have been exceptionally focused, with their team putting together detailed and targeted letting strategies that identify the perfect tenants for certain properties and look at the strategic value of individual tenants. They then actively pursue these tenants and work with them to structure a suitable rental package that works for all parties. “This way we also ensure the perfect tenant mix – essential for retail clients. It is extremely important for a centre to maintain the right tenant mix which talks to, and services the needs of, the consumers within that centre’s vicinity. A tenant attraction strategy is of paramount importance. For this reason, Spire also collaborates with a vetted selection of property brokers who are experts within their fields, who work alongside Spire’s own in-house experts.”
In order to maximise occupancy within a building and engender lasting, long-term relationships between tenant and landlord, the time has come to take an alternative view on things and to do things differently to suit each individual customer. Ultimately vacancies cost money. So tenant attraction and retention is a priority. “To achieve this it is important to realise that rental is, in fact, the by-product of the property process, not the main driver. Can a business trade is a more important question? Get that right and the rest follows,” concludes Gardner.
Huntingford comments in closing that “Spire are extremely pleased to have in essence achieved results that fly in the face of the current recession. In just over 6 months we have managed to let space equating to 10% of our portfolio.”