Harare’s property repurposing renaissance

01 Apr, 2022 - 00:04 0 Views
Harare’s property repurposing renaissance Stanely Mall

eBusiness Weekly

Taking stock

Kudzanai Sharara

The building close to the corner of Jason Moyo and Angwa Street used to house Nations Hardware, but starting today it will be known as Stanley Mall as shown in one of the accompanying pictures.
Another building at the corner of Jason Moyo and First Street used to house department store Barbours, but is now known as Galaxy Mall.

Yet another building at corner Robert Mugabe Road and Chinhoyi Street used to house Standard Chartered Bank before it got burnt down. Following its refurbishment, it will soon be opening its doors, as a shopping mall.

In Warren Park 1, a big building was put up only to be subdivided into small retail outlets. At corner Kirkman Road and Harare Drive, there is another building that is almost complete and you don’t need to be told what sort of clientele they are looking for as the building has already been subdivided into small retail store units.

There are many such buildings in Harare and probably in many other cities and small towns. It seems the era of large business spaces is coming to an end.

Inside of Stanley Mall

The real estate sector has been impacted in a variety of ways as the country continues to face economic headwinds for more than two decades now.

Economic challenges have come with informalisation of the economy and commercial properties are the most affected.

The property development market has changed considerably in the last few years, and even more so since the start of Covid-19.

The needs of occupiers have changed and to navigate the unpredictable real estate sector, investors are evaluating assets and looking for ways to increase the resilience of their portfolios.

Voids and delayed to non-payment of rentals by big businesses has become the norm and in a Market Update for the first half of 2021, Knight Frank estimated that about 60 percent of offices in the central business district (CBD) were vacant.

As a result, experts believe these hard hit property markets may never recover if they are left to their original purpose.
Warehouse and small retailing space are now in hot demand and the market’s savviest investors have taken notice, and their investment strategies have shifted to accommodate today’s needs and predict tomorrow’s demand.

Real estate owners are choosing to undergo property conversion to breathe new life into their lagging investments and as a result commercial real estate may never look the same.

Subdividing large spaces into small shops and booths is one-way property owners are tailoring redundant space to the new real estate market.

According to the Knight Frank report quoted earlier, to cushion themselves against losses, some landlords are repurposing CBD office space into small retail suites for occupation by small businesses retailing various commodities meaning retailing is now being done on both ground floors and floors above.

The rentals from repurposed buildings are also significantly higher. At Stanley Mall, all 32 small retail suites on the ground floor were leased out in less than a month. It costs US$800 per month to lease an average 12 square meter small retail suite on the ground floor.

On the first floor, the rentals come down to US$600 while booths can be rented at US$300 per month. At Galaxy Mall, the average rent for a small retail suite on the second floor is US$1 000.
The rentals are far much higher than the traditional Harare CBD rental rates for offices of around US$3 to US$8 per square metre depending on quality and size.

Demand for space is reshaping according to Old Mutual Zimbabwe CEO Samuel Matsekete.
Responding to a Business Weekly question during Old Mutual’s media briefing, Matsekete said the evolving trends in terms of use of space had not gone unnoticed.

“Demand for space in the CBD is no longer the same form that we would have seen in the past. People want smaller space and they want more and better access within the CBD,” said Matsekete.
Going forward Matsekete said with regard CBD properties the strategy would be “to repurpose the properties so that we respond.”

Malls such as High Glen are also earmarked for repurposing as the trends seen when they were constructed “have been overtaken by other developments”.

Francis Chinjekure, Market Research Analyst and Commercial Sales Partner, Rawson Properties, says repurposing some of the space is a direct response to the realisation that the market demands and expectations are now changing at a more relatively faster rate than before.

“Digital technology, Globalisation, Robotics, Automation, Outbreaks, Economic Challenges and changes have also taught us real estate professionals to adapt and create spaces that are in line with space occupiers’ expectations.

“The reconfiguration of space is being driven by the necessary change of use to balance high retail space demand and declining office space demand, Chinjekure said.

Matsekete also spoke of another emerging concept of shared space with people wanting to access space for a short period rather than long-term leases.

“So it’s also another one that we are testing and we have another property that we have put in a pilot project and we see this presenting real opportunities.”

Market expert Kura Chihota said real estate, just like any other product, goes through an S-Curve.
According to Chihota repurposing is readjusting an existing asset that might be old or has reached economic obsolescence to current market trends.

“So the repurposing I think is a strategic imperative of any asset manager who wants to retain value in an existing structure by converting big shops into little shops and factories.

“It’s the nature of markets to find the most efficient use of real estate so repurposing is ongoing. I think it should be tactical as part of a strategic response to maintain value in your portfolio,” Chihota said.
Chinjekure expects the trend to continue and property developers have to be more flexible “as we go into the future which is expected to be more dynamic”.

“All of the above drivers are expected to continue and vary as we go into the future and therefore shows that the strategies are more permanent than just being reactionary and survival tactics.”

However, there are also downsides to changing the functions of properties as conversions may present difficulties for people around the area, creating issues like noise, health, and disruption.

To repurpose a property, owners, however, have to seek approvals from Harare City Council.
City authorities are actually encouraging such practices which are seen as a form of urban renewal according to Harare City Council head of corporate communications Michael Chideme.

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