Offering a much-needed voice for the South African tenant
Occupiers of corporate real estate are coming to the realisation that their interests, as tenants, are best served when they have their own, unconflicted advocates.
This represents an important shift in the property landscape – in South Africa and the rest of the continent, tenants have traditionally not had access to representatives who act solely on their behalf.
Real estate is a major cost component for most companies, and the power balance is often skewed. In many cases, tenants do not have enough information on hand to be able to negotiate the best rental terms.
Cresa, the largest provider of occupier-focused commercial real estate in the world, has now launched in South Africa, and the company is bringing the focus back to tenants, according to Cresa South Africa’s Head of Corporate Real Estate, Guy Voller.
“Historically, the market has been one in which landlords hold the majority of the power, but in recent times, the pendulum has begun to swing the other way.
“And with occupiers, in effect, running the current market – and real estate being the second biggest corporate expense after payroll – corporate space users are increasingly looking to reassess their real estate plans and are considering enlisting the services of firms that specialise in tenant representation,” said Voller.
An efficient property market enables a fast-growing economy
President Cyril Ramaphosa described Africa as being “on the cusp of a new era” at the South Africa-Japan Business Forum in Yokohama, Japan, in August.
“Taken as a whole, Africa is already the world’s eighth largest economy and is set to expand rapidly over the coming decades,” Ramaphosa said.
The continent boasts the second highest urbanisation rate after Asia, and by 2030, 82 African cities will have populations of more than 1 million people and five will have populations of more than 10 million.
Home to six of the world’s 15 fastest growing economies, Africa is widely considered the final frontier for industries across the board. Commercial real estate is no exception, and laying the foundation for an efficient and fair property market will form a key part of the continent’s growth story.
Specialised tenant-advisory firms versus traditional brokerage firms
Specialised tenant advisory firms offer their clients an array of services, many of which are not priority focus areas for traditional brokerage firms because they are not as lucrative as transaction-based services. These ancillary services include the handling of transactions, strategic services and project management.
While many traditional brokerage firms claim to represent both landlords and tenants, the reality is that there are often conflicts of interest.
Most traditional brokerage firms derive about three-quarters of their overall revenue from owners and investors, and only one quarter from occupiers. This implies that they have an inherent bias towards landlords.
According to Jim Underhill, CEO of Cresa Global, they are responding to increased market demand for unbiased commercial occupier representation globally.
“We are truly excited to have Guy Voller joining us as our Market Leader in Johannesburg. Our exclusive relationship with occupiers allows us to be totally independent, solely advocating on behalf of our clients. South Africa, the second largest economy in Africa, is a strategically important market for corporations, and Guy’s team brings an outstanding resume and client relationships. We will continue building our platform around top professionals around the world.”
With a deep understanding of the real estate market, underpinned by market analysis and data-driven insights, Cresa helps occupiers and tenants to become more competitive.
Voller added, “At Cresa, we’re focused entirely on occupier needs and providing integrated real-estate solutions that meaningfully impact our clients’ entire businesses. Our team members have decades of experience as tenant representatives between them. Our experience in this space allows us to demystify the markets for our clients and help them uncover ‘hidden plays’ that give them the edge they need.”
“Whether we use our services to improve financial performance, reduce risk or integrate our clients’ technology needs, we are on a mission to empower tenants, allowing them to focus on their business. With occupier-centric representation, we’re helping them navigate challenges and exploit opportunities.”