Spear Reit, the Western Cape–focused real estate investment trust, is banking on a tight supply of office space in Cape Town’s established commercial nodes to drive occupancy and returns across its commercial office portfolio.
The accelerating return-to-office trend, coupled with renewed demand from small and medium-sized tenants, has translated into improved occupancy levels and a sustained decline in vacancies, the group said in a trading update for the 10 months to end-December.
“On a year-to-date basis, the South African economy has shown marked improvement, boosting business confidence and supporting the expansion activity of occupiers,” Spear said.
“Coupled with the scarcity of new supply, this creates a favourable environment for rental growth on renewals and re-lets, even as operating costs continue to rise within the commercial portfolio.”
In Cape Town and across the Western Cape demand for office, industrial, and retail space is exceeding the available supply, creating a highly competitive market, Spear said.
Read: Retail property growth gathers pace, driven by Western Cape
That is evidenced by group headline earnings per share for the 10-month period rising just 2.8% to 74.94c from 72.92c a year earlier.
In the review period Spear bought R1.07bn of real estate at an average acquisition yield of 9.54%, exceeding its weighted average cost of capital. All new acquisitions were integrated into the portfolio by the end of December.
The group lifted its full-year distributable income per share guidance and is targeting growth of 5%-6% year on year.
The industrial portfolio continues to perform robustly, underpinned by strong demand for logistics, warehousing, manufacturing and multi-let industrial assets across the Cape metropole and Drakenstein.
The group’s retail portfolio was boosted by re-tenanting, a reduction in vacancies, and the addition of Maynard Mall. Anchored in high-growth nodes with mostly national tenants, the portfolio continues to benefit from positive trading and a supportive macroeconomic environment.
“Our industrial assets remain the cornerstone of the portfolio, providing defensive income across a diversified mix of multi-let and single-tenant properties,” Spear said.
“While we have remained underweight in retail, disciplined timing enabled the acquisition of Maynard Mall in Wynberg in October 2025.”
The group reported robust rental collections as its overall vacancy rate improved to 5.63% from 9%. Its loan-to-value ratio is 25.04% after the implementation of the most recent acquisitions.
“The development pipeline of high-quality industrial assets is set to add further value to the core industrial portfolio with the GTX Development in George set to add 30,000m2 of industrial GLA, Bravo Park Extension 2 in Blackheath set to add 7,500m2 of industrial GLA and The Anchorage in Paarden Eiland set to add 2,000m2 of industrial GLA,” Spear said.
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