Flexibility and collaboration could be core values to organizations going forward

Knight Frank: Flexibility and collaboration could be core values to organizations going forward

Since the onset of COVID-19, countries across Africa have adopted a range of measures to curb the spread of COVID-19 and the subsequent impact on the respective economies.

However, uncertainty remains rife as to the extent of the impact of the pandemic on the real estate markets across the continent. The current crisis has introduced a new dynamic for all types of corporate occupiers, from multinationals to corporate occupiers in Africa.

While we are unlikely to witness an extreme shift to remote working, flexibility and collaboration are going to be core values to any organisation going forward.

This is according to a report released by Knight Frank dubbed Africa Market Pulse Survey Results – 2020. The report is as a response and strategies to the COVID-19 crisis. The key findings are from office landlords, office tenants, retail landlords and tenants

The report also shows that in the short to medium term we will probably see a change in office layouts and design, as the overall employee density remains low, in line with the pandemic’s containment measures across different countries.

In the long-run, Knight Frank predicts that the utilization of the office premises will be changed to collaborative spaces, where talent retention and health and wellness for employees will be a key aspect of the new office-as-a-service for corporates.

Such trends will not quite be new because coworking spaces like Nairobi Garage, have been offering flexibility and collaboration among its community.

A summary of the survey key findings, as well as their market sector outlooks, are provided below:

Office Landlords

The report further shows that 40% of office leasing deals under negotiation at the onset of the pandemic face delays, while 30% are on hold. This indicated the extent of the impact of the pandemic on businesses.

This immediate stress in the office market is further accentuated by the fact that only 20% of signed leases are proceeding as planned.

27% of respondents also indicated that tenants had successfully requested rent deferrals while 33% had undertaken a renegotiation of lease terms on existing leases, with 40% of landlords stating they are likely to offer further concessions to maintain existing tenants and attract new ones.

50% of respondents are wary of the general uncertainty in the market, citing it as the greatest challenge to their real estate portfolios, followed by an apprehension that tenants may not be able to pay their rent (30%).

30% of the respondents indicated that the current pandemic would not deter them from investing in commercial office spaces in the future, while an equal 30% remain uncertain of the pandemic impact on their future investment decisions.

As the continent braces itself to adapting to the new normal, the report also shows an overwhelming 70% of the respondents have already adopted a post-COVID-19, re-Occupancy Strategy to ensure business continuity.

Office Tenants

On office tenants, 76% of the respondents have indicated that their organizations intend to implement social distancing policies upon resumption of business leading to reduced density in their offices.

Opinion remains divided with regards to the types of workspace models to be adopted moving forward. 48% of the respondents strongly believe that organizations will consider moving away from the traditional real estate workspace model and implement flexible workspace policies more aggressively, while 43% believe that the type of workspace model adopted will vary for each organisation.

While globally the accelerated adoption of remote working is expected to filter into normal work life after the resumption of business as usual, 48% of the respondents expect that 75% to 100% of their employees will return to work on a full-time basis. Subsequently, only 19% of the respondents expect to reduce their amount of office space occupied.

Going forward, while the pandemic is expected to lead to a new normal of remote working, the need for physical space in Africa remains dominant even as organizations embrace the values towards collaboration and flexibility.

The report also highlights Africa’s retail performance, that has previously remained fragmented across different markets. the report can be accessed here.