SAPOA’s April 2025 Office Vacancy Report revealed some interesting trends behind the numbers. Our experts have studied the results and today we offer you their insight into two areas that piqued our interest: why Cape Town has the lowest vacancy rates, and why prime-grade office space is in such demand.
Director Mike Van Schoor says that, “Cape Town’s notably low office vacancy rates compared to other metros in South Africa can largely be attributed to a combination of semigration and limited new office supply.” Put simply, there is limited land available in Cape Town for new commercial developments, which has constrained the supply of new office stock. “The main area currently accommodating new office developments is Riverlands,” he says. Professional valuer Mark Govender agrees, saying that “a drop in space under development may help owners in that a reduction in new supply may help rebalance vacancy over time, supporting future recovery.”
Van Schoor says that Cape Town has experienced a steady influx of residents and businesses relocating from other provinces, particularly Gauteng, due to the more stable and efficient governance provided by the local municipality, which has fostered business confidence, especially for niche markets like the business process outsourcing industry. “Sandton continues to face oversupply and slower return-to- office activity in this premium market, while Cape Town remains resilient, possibly due to lifestyle appeal and hybrid work advantages,” adds Govender. Cape Town broker Ryan Snyman feels that besides the natural beauty and better overall lifestyle that Cape Town has always offered, the noticeable deterioration of the other major business hubs in the country has pushed Cape Town even further ahead. “Also, we are constrained by geography in the CBD, so there is only so much commercial space to let.”
Cape Town’s improvement is underpinned by consistent demand across all office nodes, with every node in the metro showing an improvement from the vacancy peak in mid-2022. “The market’s resilience is attributed to the quality and location of its office stock, particularly in decentralised nodes such as Century City, Claremont, and Rondebosch/Newlands,” says associate director David Du Plessis. “The Cape Town market also benefits from limited new speculative development. Most new projects are tenant-driven, ensuring that supply remains in balance with demand.”
Durban is the second-best performing metro, with Umhlanga and La Lucia still attracting tenants looking for modern, well-located office environments near the coast. “Similar to Cape Town, Durban has also benefited from the semigration trend, especially from Johannesburg,” says Van Schoor. “The metro has seen little to no new commercial office stock coming onto the market, helping maintain low vacancy levels.”
By contrast, Johannesburg, the traditional hub for head offices in South Africa, was significantly affected by the pandemic and the subsequent shift to remote work. “Johannesburg experienced the highest office vacancy rates among the major metros,” says Van Schoor. “Post pandemic, many corporates downsized, releasing large amounts of office space back into the market.
Johannesburg’s vacancy rate (16.5%) is significantly higher than the pre-pandemic level of 12.5% at the end of 2019 and reflects ongoing challenges in absorbing
oversupplied and underperforming stock. “The oversupply problem is most evident in B-grade buildings, which account for a large share of the city’s vacant space,” says Du Plessis. “Despite this, there are some stronger-performing sub-markets within Johannesburg. Rosebank stands out with an overall vacancy rate of 10.7%, driven by sustained demand for Prime-grade space.”
Changing workplace priorities and the evolving expectations of employees are two of the drivers behind the stronger recovery of Prime-grade (P-grade) office space compared to lower-grade categories (A, B, and C). “In the wake of the pandemic and the shift to hybrid work models, businesses have placed increased emphasis on creating attractive, high-quality working environments to encourage staff to return to the office,” says Van Schoor. “P-grade buildings offer a distinct advantage in this regard, typically featuring high-end finishes, modern layouts, ample natural light, wellness and fitness facilities, break-out areas, on-site food options, and other amenities that enhance the overall employee experience.”
“In Cape Town, partly due to the influx discussed above, the scarcity and value of land in the CBD means that new buildings are developed to their best and highest use, and older buildings are being redeveloped to achieve a higher grading and thus higher rentals,” says Snyman.
Govender adds that “B-grade space is losing traction, possibly due to tenant preferences for either premium or cost-effective space. C-grade office vacancy rate fell slightly, which could reflect competitive pricing or repurposing efforts bearing fruit.”
This trend reflects a broader market shift: tenants are increasingly prioritizing higher- quality office buildings that offer modern infrastructure, energy-efficient systems, and flexible layouts suited to hybrid work strategies. “High security, ample parking, modern finishes, and green building features are becoming non-negotiable criteria for many corporate tenants,” says Du Plessis. “As companies reduce their overall footprint in response to hybrid working, they often choose to consolidate their operations into fewer but better-quality spaces, offsetting the relative cost by reduced space requirements and improved employee satisfaction and productivity.”