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In 2025, it is not just about visibility or accessibility; it is about anticipating where investment is heading and aligning with that momentum.
For illustrative purposes. Picture: iStock
Investing in commercial property can offer significant long-term returns and portfolio diversification, but success in this market is rarely accidental.
Paul Stevens, CEO of Just Property, says whether you are a seasoned investor or exploring development opportunities for the first time, understanding what to look for and what to avoid is essential in building a resilient and profitable portfolio.
He offers eight tips one should consider when investing in commercial property.
1. Choose your location wisely: where investment flows, growth follows
Stevens says location remains a fundamental driver of commercial property value, but this goes beyond the old mantra of “position, position, position”.
In 2025, it is not just about visibility or accessibility; it is about anticipating where investment is heading and aligning with that momentum.
“Look out for areas undergoing infrastructure upgrades, precinct developments or special economic zone designations.
“Cape Town continues to outperform much of the country in terms of governance, safety and service delivery. The Western Cape government’s consistent investment in transport corridors, clean energy and urban regeneration has translated into increased investor confidence and steadily declining vacancy rates in prime office and mixed-use nodes.”
2. Demand and supply: read the vacancy rate, not the hype
He adds that vacancy rates are a leading indicator of demand. High vacancies put pressure on rental growth and may suggest an oversupplied or underperforming submarket.
Conversely, low vacancy rates can support stronger rental escalations and indicate a more competitive tenant pool.
“In the office sector, for example, we are seeing a recovery in key urban centres. Prime office space in Cape Town’s CBD and decentralised nodes, such as Century City, is approaching historically low vacancy rates, following a sustained period of contraction and adjustments to hybrid work arrangements.
“If you’re considering investing in retail, look for assets that offer a mix of essential services, grocery retail and lifestyle offerings – and pay close attention to tenant composition and turnover.”
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3. Industrial property: logistics still leads
“If there is one segment that has consistently outperformed for more than the past five years, it is industrial.
“The pandemic-era acceleration of e-commerce created a structural need for warehousing, last-mile logistics and flexible distribution facilities. That demand has not waned. In fact, it has matured into a broader trend,” highlighted Stevens.
He advises that when assessing industrial property opportunities, proximity to arterial roads, ports, and freight hubs is vital.
Similarly, flexibility of use is a key consideration; a building designed for a single tenant type is riskier than a multipurpose facility that can serve multiple industries. Green features like solar PV and rainwater harvesting are increasingly not just value-adds, but requirements.
4. Zoning, bulk, and development potential
Development-led investors should look for land with the right zoning already in place, or with realistic prospects for rezoning. Land banking in areas earmarked for future expansion can yield strong returns, but only if the right groundwork has been done.
Stevens highlights that understanding bulk rights, building lines, parking ratios, and environmental overlays is essential. This involves engaging early with municipal planning departments to understand precinct plans, transportation frameworks, and timelines for service rollouts.
“The redevelopment of underutilised commercial buildings is another emerging trend, particularly in older business districts.
“However, retrofitting comes with its own risks – compliance with new energy and fire regulations, heritage approvals or the cost of upgrading old systems to modern standards.”
5. Follow the money: where are building plans being passed?
Stevens says municipal data on building plan approvals can offer a leading insight into where private developers are placing bets.
“If you notice an uptick in industrial plans being passed in a particular node or mixed-use precincts gaining traction in a suburban area, it is a sign of confidence and forward-looking demand.”
At the same time, it is worth noting where plan approvals are declining, especially in overtraded sectors. For instance, many municipalities are experiencing a slowdown in office building approvals, reflecting the oversupply that followed the 2020-2022 remote work trend.
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6. Economic signals: interest rates and lending appetite
He emphasises that it is crucial to recognise that commercial real estate is capital-intensive, and the cost of debt significantly influences the feasibility of projects.
“While the South African Reserve Bank (Sarb) initiated a rate-cutting cycle in late 2024, recent global economic uncertainties and inflationary pressures have led to a more cautious approach.
“The prime lending rate is expected to remain relatively stable through 2025, with potential modest declines contingent on favourable economic developments.”
Having equity or access to patient capital is a competitive advantage in this environment. It also underscores the importance of robust due diligence, clear business cases and tenant pre-commitments when seeking finance.
7. Keep an eye on the cycle
Commercial property is cyclical, and timing matters. Different asset classes perform differently depending on the stage of the cycle. Right now:
● Offices are moving into recovery mode, particularly in decentralised nodes with high-spec buildings.
● Retail is holding steady in neighbourhood and convenience formats, but faces structural headwinds in large regional centres.
● Industrial continues to outperform, especially in logistics-driven corridors.
● Hospitality and student housing are attracting renewed attention as tourism rebounds and tertiary institutions return to in-person learning.
Understanding these dynamics can help investors capitalise on the upswing and avoid being overexposed during downturns.
8. Regulatory clarity and operating risks
He says that it is essential to ensure one understands the regulatory environment, from the basics of building compliance and zoning to the tax implications of owning and operating commercial property.
This includes being aware of legislation such as the Property Practitioners Act and municipal bylaws, which affect everything from agency mandates to electricity resale.
“The commercial property market rewards insight, not speculation. Success lies in doing your homework: understanding market cycles, selecting growth areas with strong fundamentals, and partnering with experienced commercial brokers who can help you unlock long-term value.”
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