JOHANNESBURG - South Africa’s commercial property sector is showing signs of strain.
A new report suggests that rental escalations may have reached their limit.
The 2026 Voice of the Commercial Tenant Report shows that more than half of commercial property tenants say increases above four percent are no longer sustainable.
This comes as costs continue to rise across utilities, municipal billing, and operations.
Waldo Marcus, director at TPN Credit Bureau said this was indicative of a fundamental shift in affordability.
“The old escalation models are no longer aligned with tenant realities, and that disconnect is where vacancy risk starts to build,” Marcus said.
“The overall sentiment towards the economy, although showing stable, indicates that there is still a big chunk of tenants who are very pessimistic of what the economy holds to enable their businesses to grow.”
Marcus said the tenants said strain comes from governance and compliance regulations that have taken a lot of resources which would have been spent in growing their businesses.
According to the report, office space is showing resilience, with the highest satisfaction levels and strongest business confidence among tenants. Nearly 39% report a positive outlook, positioning offices as a relative outperformer in a fragmented market.
ALSO READ | Breaking the glass ceiling in the property sector
Marcus said the commercial tenants were also struggling to keep up with the various costs of occupation including electricity instability, municipal inefficiencies, and poor infrastructure.
“Interestingly, they [tenants] also show signs that they are not extremely happy about the space they occupy. They have listed numerous reasons including the lack of foot traffic for their businesses.”
A large proportion of the tenants sit in a “neutral” zone, stable for now, but highly sensitive to any further cost increases.
He warns that while there were around 38 percent of neutral tenants, they are also the most likely to leave when the numbers stop making sense.