FNB Commercial Property Survey

The percentage of broker respondents perceiving business conditions to be satisfactory rose mildly in the 1st quarter survey to 26%, up from 21% in the previous quarter, but this remains a very weak level and largely reflective of weak business confidence across the broader economy. 

When asking brokers for their ratings of market activity levels on a scale of 1 to 10, we see that the group of respondents is most upbeat about the Industrial and Warehouse Property Market. The Industrial Property Market's 1st quarter 2021 Activity Rating rose noticeably from 4.68 in the prior quarter to 5.44. The Retail Property Activity Rating also increased, from 3.59 to 4.18 over the same 2 quarters. The Office Property Market Activity Rating remained the weakest of the 3, but also rose slightly from 3.32 to 3.39. 

The Near Term Expectations Indices of Property Market Activity, reflecting broker near term expectations, saw the respondents being least optimistic about Office Property, which recorded a negative value of -7, while the Industrial Property Market recorded a positive +26. The Retail Sector response was in between the former 2 sectors, with a mildly positive +10.  In all 3 property markets, the brokers still saw the recessionary economic impact from COVID-19 lockdowns as being a major influence (drag) on their near term market activity expectations. However, in the Office Sector, the lockdown-related Work From Home (WFH) success is also believed to be influencing a portion of firms to plan the downscaling of their space requirements, while this sector is also heavily impacted by recent job reduction . The impact of online retail in the Retail Property Sector is seen as far less significant than the WFH impact on the Office Market.