South Africa’s commercial property market is edging out of its downturn, but the recovery is uneven enough to resist any simple narrative of revival.
The first quarter 2026 FNB commercial property broker survey shows sentiment is improving, with satisfaction rising compared with the previous quarter.
“On the surface that suggests a sector regaining momentum after a prolonged trough. But the detail tells a more cautious story: the rebound is selective, asset-specific and increasingly defined by structural rather than cyclical forces,” said FNB senior economist Siphamandla Mkhwanazi.
Industrial property remains the standout as the only segment consistently described as the best performer, driven by steady demand for logistics and warehousing.
However, supply constraints — from infrastructure bottlenecks to rising development costs — are preventing oversupply and keeping conditions balanced to tight in several regions. Even where broader market conditions remain subdued, industrial assets continue to attract demand.
Retail is stabilising, but not accelerating. The sector is moving through a gradual rebalancing phase as weaker centres are rationalised and excess space is repurposed. Retailers remain cautious, prioritising profitability and location quality over expansion. The result is a slow normalisation rather than a decisive recovery, with coastal metros showing firmer conditions than inland regions, the survey said.
Office property remains the clear laggard and is the only major asset class to record a year-on-year decline in activity, underscoring the depth of the structural adjustment that is occurring.
Demand is narrow and selective, concentrated in modern, well-located buildings, while older stock continues to struggle with persistent vacancies. Much of the activity recorded is defensive in nature — driven by downsizing, renegotiations and space optimisation rather than expansion.
“Commercial property activity is strongest in the Western and Eastern Cape, with Cape Town and Nelson Mandela Bay showing gains across asset classes. Inland metros such as Joburg [and] Tshwane … lag due to weak office fundamentals,” said Mkhwanazi.
“Industrial strength and retail pockets support stability. The broader picture is stabilisation rather than renewed deterioration.”
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.