COVID-19 may have accelerated changes to South Africa’s central business districts (CBDs), with many emptying out significantly during the lockdowns, but the truth is that CBDs were changing long before the pandemic hit with companies seeking to close their head offices in favour of more pocket-friendly, but equally as sophisticated serviced office spaces.
Business hubs such as Sandton in Johannesburg and Cape Town’s city centre have long grappled with a reality in which availability begins to outweigh demand, as business owners opt for downsizing either to smaller spaces outside of these hubs or moving to serviced office spaces within these hubs instead, as a way to avoid paying high city rentals. The state of the ailing economy hasn’t helped either.
So, is there any hope of maintaining the CBDs of the past into the future?
Not in their current form, says David Seinker, founder and CEO of The Business Exchange. He believes that today’s workers – and their employers – are seeking something different from the norm. And that means we’ll see many more changes to the status quo in the years to come.
Here are some reasons why:
- Big corporates are realising that they don’t need big, centralised headquarters
“Big companies are catching on to the fact that, in the current and future digital reality, it’s becoming increasingly unnecessary to fork out hefty monthly sums on expensive long-term office leases – especially when serviced office operators such as The Business Exchange offer equally premium and sophisticated spaces, with more flexible lease options, at a fraction of the cost,” Seinker points out.
Add to this the fact that businesses are also realising that they really don’t need those thousands of square metres of floor area. Some parts of their business are perfectly capable of working remotely and, as a result, only a small portion of the team need an office out of which to operate.
- Work-life balance is becoming more important
“Employees are starting to realise that having a good work-life balance is key to a happy and healthy life,” Seinker says. “This is often not possible when you’re spending hours commuting to and from their office, having to leave at a ridiculously early hour to beat the traffic, then getting home late at night.”
Many business districts are overcrowded, and with that come traffic jams and wasted time on the road. Today’s employees want more time at home, and they’re not afraid to make their feelings known. As a result, companies are relooking at their operations. Many have implemented flexi-time or remote working options as part of their offerings. Others are dividing up teams across different serviced office spaces with premises in several locations across a city and country. This allows companies to hire and place people closer to where they live.
- There is an increased awareness of the risks of crowds
“COVID-19 has taught us that when it comes to our health, there is no safety in numbers,” comments Seinker. “Businesses are looking at how to minimise staff contact and allow for a socially-distanced workspace. This means that there are fewer people in the office and, therefore, fewer people entering the CBD on a daily basis.”
Even with some businesses reopening their offices, many teams are not back full-time, operating on a roster basis and only heading into these businesses hubs two to three times a week. Employers and employees are keeping their distance from one another as South Africa’s COVID-19 cases show no sign of letting up, and everyone tries to keep themselves and others safe from the virus.
- Small restaurants and similar businesses have closed
“Unfortunately, restaurants have taken a real beating during the lockdown and those who weren’t on a secure footing before, just haven’t managed to survive,” Seinker adds.
“Many of the small cafes that we used to enjoy in the city centres are now closed and properties are standing empty, with little indication of when and if they might get a new tenant.”
These vacant storefronts, and a scenario in which it won’t be possible to always grab a quick cup of coffee as you used, all contribute to less than vibrant CBDs. Not only will there now be fewer options from which to choose, but customers will also have to be vigilant about ensuring those that are open have instituted adequate measures to reduce the risk of COVID-19 infection.
- Rent in the CBD is simply too expensive for many businesses
“Everyone is under financial strain at the moment, and businesses are realising that rent on a big space in a prime location is simply becoming too expensive to maintain,” says Seinker. “This is one of the top things that businesses are looking at when it comes to cost-cutting and, as a result, many are moving into serviced office spaces where they can save a potential 70% on their lease investment.
“In the case of The Business Exchange, we offer sophisticated, and easily-accessible offices in a variety of locations.”
With the purse strings being tightened in every aspect of business, many bosses are finding that working out of central hubs, from big headquarters, is just no longer a necessity. So they’re moving to serviced spaces or moving locations altogether to suburbs where they still enjoy easy access to the CBD. Alternatively, staff are working remotely. Whatever the option of choice, it’s significantly less expensive.
So while CBDs may not necessarily be on their way out altogether, they certainly have to.