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Construction projects saturate office space market

Construction projects saturate office space market
INCREASE OF CONSTRUCTION: CBD, Gaborone

The market for office space remains weak due to increasing supply from completed construction developments mostly in the Gaborone Central Business District (CBD).

The recent Monetary Policy Report (MPR) states that the completion of buildings such as the Botswana Unified Revenue Services (BURS) building at the CBD has led to an increase in the supply of office space, rendering it weak.

However, the report states that despite the COVID-19 movement restrictions and generally weak demand for office space, there was some take-up of office space, although limited, at the CBD by the government which has become a major consumer, as well as by some corporates.

Given the ongoing construction projects in the area and with others in the pipeline, the supply of office space is expected to increase further.

This is expected to exert downward pressure on rentals, especially in decentralized office locations.

Further, the outbreak of the pandemic has resulted in most companies allowing their employees to work from home, it is believed this could negatively affect the demand for office space.

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While the office space is said to be weak, demand for the retail space is considered fair across all market segments, similar to the previous quarter.

The supply is expected to increase on completion of the ongoing construction of a major shopping centre in the CBD, while another one is proposed for Mogoditshane.

“In addition, other centres with good demand for retail space are Jwaneng, Lobatse, Selibe Phikwe, Maun, Francistown, Mahalapye, and Letlhakane,” says the MPR.

It is said this is because most of these locations have a few retail schemes at the planning and/or construction stage and are to be anchored by reputable supermarkets.

When it comes to industrial property, the supply of unoccupied big warehouse space is reported to have decreased, while the demand has improved.

Meanwhile, the availability of prime location industrial space is expected to decrease going forward, given that most of the centrally located industrial land is almost fully developed and occupied.

In addition, the residential rental is said to have weakened in the fourth quarter of 2020, compared to the third quarter of 2020, due to weaker demand for both the upper and middle-end properties.

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However, it is stated that the lower-end properties enjoyed a good rental market in terms of both demand and supply, despite the COVID-19 lockdowns in the second and third quarters of 2020.

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