Insights from JLL into recent commercial property leasing trends

‘To enforce back-to-office policies a lot of companies are having to compete with the comfort of their employees’ homes’ – Hugh Hardy, head of tenant representation for sub-Saharan Africa at JLL.By Ciaran Ryan · 27 Nov 2025   00:03 

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CIARAN RYAN: South Africa’s real estate sector is showing promising signs of recovery, nudged along by falling interest rates and some encouraging economic news – not to mention being removed from the Financial Action Task Force grey list, as well as the credit rating upgrade by Standard and Poor’s to BB.

Now, JLL Africa is South Africa’s premier real estate provider and has a front-row seat to what is happening in the property market. Joining us now is Hugh Hardy, head of tenant representation for sub-Saharan Africa at JLL.

Hi Hugh, thanks very much for your time. Tell us a little bit about the market. There seems to be renewed confidence not just in the property sector but across the broader economy. Is this what you’re seeing?

HUGH HARDY: Hi Ciaran, thanks very much for having me. Yes, I agree with you. We are seeing cautious optimism that has been growing over the last year.

We’re hoping that the recent removal from the grey list and our credit rating upgrade will result in increased foreign direct investments, which should see more entrance into the South African market.

We’re getting a sense that occupiers are willing to commit to longer-term leases instead of insisting on much more flexibility, and we’re seeing this as a sign that businesses are willing to be here for the long term.

We still do have continued uncertainty around US tariffs and the impact on South African jobs and businesses. We are already seeing the effects of this on our automotive industry clients. But I think overall, based on the positive indicators we’re seeing, we’re pretty optimistic for 2026.

CIARAN RYAN: Okay. So let’s just zero in on one or two sectors. I’m curious to hear what the trends are like in the office sector – which, of course, was devastated during and after Covid. What trends are you seeing there?

HUGH HARDY: Sure. Thankfully, there has been some relief for landlords in the past year, with lowering vacancy rates in office [sector], particularly for premium and Grade-A stock.

We think the demand is primarily coming from tenants who are increasing their return-to-office policies more than new entrants into the market.

I think in general we’re seeing a continued flight to quality.

Our clients prefer to take better space, even if this means compromising on how much space they take.

I think this is interesting because, to enforce back-to-office policies, a lot of companies are having to compete with the comfort of their employees’ homes.

So in order to earn that commute and encourage the back-to-office shift, they’re having to invest in higher office and higher-end fit-outs.

I think for B- and C-grade office vacancies, we’ve also seen these coming down, but not to the same degree. Landlords are still under pressure.

The reduction of B- and C-grade office vacancies I think is partly due to the take-up of space by large BPO [business process outsourcing] and call centres, as well as the conversion of some of the office buildings into residential properties, thereby taking that stock out of the market.

Another continuing trend that we’re seeing is for secure precincts.

We’ve seen great demand for Intaprop’s Oxford Parks in Rosebank. Another good example is Waterfall City, which is being developed by Attacq; and Rabie in Cape Town is developing out more buildings in Century City.

That’s the one place where we’re seeing green shoots in the office sector, where the landlords are willing to build on spec without having the buildings fully tenanted.

CIARAN RYAN: Is it the same story in the industrial property sector, and in particular what segments of industrial property are doing well?

HUGH HARDY: I think the industrial property sector has generally performed better since Covid.

It’s the one sector where you can’t work from home. You have to be in a specialised facility if you’re going to be doing anything that is in industrial or logistics.

The increase in demand we’ve seen over the last year has specifically been around e-commerce.

There’s been a push for supply-chain logistics facilities, cold-storage for food and data centres – which is not surprising. I think e-commerce is going to continue pushing hard over the next year and it’s not really a surprise to anyone, particularly me, given how much shopping my wife is now doing online.

The problem with industrial is we have a general lack of Grade-B stock for warehouse units over 10 000m². So in order to meet that demand, we actually need to build.

We have a significant gap between what tenants are willing to pay for existing buildings and the rentals which the landlords are charging for new developments.

There are many reasons for this. But just to give you an example, tenants are generally willing to pay somewhere around R50 to R75 per square metre [net] for existing stock. But for new developments, landlords are demanding rentals of between R85 and R105 per square metre, depending on the specification. So there’s a definite gap that needs to be filled.

That being said, we do have very bullish companies in the market. Equites, in particular, is leading the way with large speculative developments in the R21 corridor. They’re rolling out spec built units one at a time and relying on securing tenants after the fact. It has been a recipe for success, so much so that the other companies are starting to follow suit.

So we’ve seen Growthpoint Properties, Attacq, M&T Development and Newlyn also starting to spec build in the same areas.

CIARAN RYAN: This spec build – is that something fairly new in the market? And why do you think they’re prepared to take that risk themselves? They obviously feel very confident that they’ll be able to let at the end of the day.

HUGH HARDY: I think Equites has done this successfully seven times in a row now. So they’ve got a proven track record of being able to get it right.

The reason for spec build now is that there’s a 12–18 month lead time between signing a lease and having a building ready to go.

Most new entrants into the market aren’t willing to wait that long. So there’s a good chance that if you build it, they will come.

CIARAN RYAN: Okay, now let’s talk about 2026, just around the corner. We seem to have hit a bit of a sweet spot in South Africa. In the intro I said we’ve had this credit rating upgrade by S&P. We’ve been taken off the grey list, [and seen] an encouraging drop in unemployment figures. So are you seeing this reflected in the demand for space from where you’re sitting?

HUGH HARDY: Yes, to a degree. I think over the next year we’re going to see a slow and cautious increase in the supply provided by developers, both in P-grade office space and in logistics type warehouses.

I think e-commerce type spaces are primarily being developed out by third-party logistics users like RTT and CEVA Logistics.

I think possibly the return to office, more than the increase in employment, is driving demand for the office sector.

So the trend of back to office and that flight to quality will continue.

Given our market optimism though, from a tenant behaviour perspective, we’re hoping to see tenants being willing to commit for longer leases. So instead of demanding as much flexibility as possible with things like break options, they’ll be able to achieve savings by offering longer leases to landlords where the landlord’s main incentive is a weighted average lease expiry as long as possible.

CIARAN RYAN: Now, tell us a bit about JLL for those who may not know what you do. You’ve announced some recent changes – and give us also your geographical spread. You are a big company. So tell us a little bit about the company.

HUGH HARDY: JLL is a global professional services firm; that means we’re in over 80 countries across the globe.

We have more than 100 000 employees and the company is listed on the New York Stock Exchange.

Across Africa, we provide services in almost every country where we either have an office or where we have a best-in-class partner who can assist. The type of services that we provide in South Africa are really about tenant representation in everything to do with commercial and industrial leasing.

We have a capital markets team, which is everything to do with the buying, selling and valuations of properties. We’ve got Tétris, which is our office design and build project and development services, strategic consulting – and hotels consulting as well.

I think the biggest change we’ve made is in how we work with our clients and to focus on providing them with a single point of contact, making it easier to work across all the business lines I’ve mentioned.

I think as a client coming in, being presented with a long shopping list of things that we do can be quite daunting. So it makes more sense to rather have a single person that you’re working with.

I’ll give you a good example of where this has worked for us recently. We did an office relocation for Warner Music Group, which was quite exciting. They had a consolidation of two separate offices into a single-leased premises. So the tenant rep did the leasing. We had Tétris doing the office design and build, and we had our project and development services team doing the project-management and cost-management services.

Overall, it went off without a hitch and we’ve now won international awards for the design and execution of that project.

CIARAN RYAN: We’re going to leave it there. That was Hugh Hardy, head of tenant representation for sub-Saharan Africa at JLL. Thanks very much, Hugh.

HUGH HARDY: Thank you, Ciaran.

Brought to you by JLL Africa.

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