Emira Property Fund said on Wednesday that vacancies within its office portfolio rose further in the five months to end-May, as many businesses offered their employees the flexibility of working from home for fear of contracting Covid-19.
Vacancies in the office market rose to 16.4% from 14.9% as of December, bringing into sharp focus the challenges faced by landlords. The office market in SA had been struggling for years before the Covid-19 pandemic, hit by oversupply, among other factors.
John Loos, property sector strategist at FNB Commercial Property Finance, expects the property market to underperform for the remainder of 2021 as the trend of working from home is likely to persist.
The office portfolio accounts for 31% of Emira’s directly held assets, while retail accounts for 49% and industrial 18%.
Vacancies within the retail sector rose marginally to 3.7% from 3.4%, with the company attributing the relatively low vacancy rate to what it termed the defensive nature of convenience shopping centres located in communities.
Emira said demand for space was increasing in its industrial portfolio and lease renewals were encouraging despite vacancies rising to 4.3% from 3.9% in December.
“Rental concessions have been provided during the period on a case-by-case basis to those tenants whose trading was restricted as a result of the Covid-19 restrictions implemented by government,” it said in a statement.
“Rent remissions totalling R31.7m were provided for the 11 months ended May 2021 and further concessions are expected for June after the new regulations announced by government on 15 June 2021.”
Emira has 78 directly held properties valued at R9.9bn in SA and equity investments into property-owning companies valued at R2.5bn, which includes 10 grocery-anchored open-air convenience shopping centres in the US.
The aggressive vaccine rollout and financial stimulus provided by the US government has had a positive effect on the US economy and retailers, the company said in a statement.
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