Shake up shopping malls in South Africa – including the end of large parking lots
While location was once the key factor in choosing a good property, the impact of Covid-19 will mean innovation is likely to be an equally important factor for years to come, says Riyaad Khan, transactor in the Real Estate Investment Banking team. to RMB.
While the full extent of Covid-19 on South Africa’s long-term real estate sector is unknown, Khan said the “old rules” for property have already evolved.
Khan said owners are already reallocating properties, but this is just the start as demand for commercial space is likely to decline even further due to a systemic drop in demand due to the pandemic. .
“The Atholl Yards development in Sandton, for example, was a former office building that has recently been converted into quality, affordable residential rental units.
“In this case, an office building that was vacant for several years now houses a community of young professionals on the doorstep of Sandton’s central business district.”
There are similar examples in nodes such as Sunninghill and Randburg, where most of the old commercial space is being converted to affordable accommodation, he said.
Khan said retail space is evolving as well, with retailers potentially looking to reduce their floor space, which will create unused space in malls.
“Large malls were already allocating more space for entertainment and experience offerings before the pandemic and we now expect this trend to continue.
“It is very possible that we will see more non-traditional retail businesses incorporated into malls. Internationally, this is a growing trend with big brands such as Tesla opting for a large footprint in high-visibility malls around the world.
“Redundant parking spaces are being converted to storage spaces, vehicle service centers and increasingly used as exhibition space for events.”
Khan said changes in real estate demand, especially when driven by an event such as Covid-19, occur much faster than the response of markets to supply.
“It is in this window of opportunity that the most innovative owners and operators will thrive. We have seen this unfold in the wake of the global financial crisis and we expect the same this time around. “
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