Office rentals in South Africa are sitting at their lowest ebb in over 20 years. Post-pandemic, the market witnessed a dramatic rental reversion – tenants downsized, moved to flexible space, or vacated entirely. But that period of tenant-favourable leverage is ending. According to the Rode Report for Q1 2025, a combination of rental bottoming out and shrinking vacancy is setting the stage for upward pressure on rentals.

In Cape Town, decentralized A-grade office rentals grew by 6.2% year-on-year. CBD rentals increased by 3.2%. Durban’s A-grade office rentals jumped 8.6%, while prime decentralized nodes like Umhlanga recorded a double-digit climb of 10.9% – the highest in the country. Vacancies are tightening. Cape Town’s decentralized nodes are effectively full. Durban, specifically Umhlanga Ridge is following closely, and as supply dwindles, demand pressures are driving rates up.

“Market rentals appear to have bottomed out and the pendulum is swinging back in favour of landlords,” – Rode Report Q1 2025

Landlords Are Thinking Short. But You Should Be Thinking Long!

Landlords, aware of the upward trend, are pushing for short-term leases. Why? Because they know they’ll be able to charge more in 12–24 months.

You, as a tenant, should be doing the opposite. By securing a long-term lease now, you effectively lock in today’s below-market rate with a fixed increase (annual escalation) for the next 5–10 years. When the market inevitably corrects, your lease becomes a financial asset – not a liability.

A 10-Year Lease Is a Strategic Hedge

• Inflation Protection: Your rental escalates at a fixed rate, while market rentals may rise far faster.
• Cost Predictability: You remove the volatility of fluctuating market rentals from your budgeting cycle.
• Stronger Negotiating Power: Landlords will offer more favourable terms for longer commitments—think TI allowances, rent-free periods, or capex contributions.

How Long Has Your Lease Gone Unchecked?

If your lease hasn’t been reviewed in the past 12 months, you could be missing an opportunity to renegotiate, restructure – or worse – overpaying in a market that’s already shifted. Want to assess your lease? Our Corporate Services team helps companies audit current leases, benchmark rentals, and negotiate better terms.

“Many office tenants are unaware that they’re overpaying, often due to outdated leases that haven’t been renegotiated since the market shifted,” says Simon Wilkins, Managing Director of Global Corporate Services at Galetti. “We help clients identify and act on these inefficiencies – turning real estate liabilities into strategic assets.”

With office rentals at a 20-year low, those who lock in long-term leases now will be sitting comfortably as the market begins to recover.

Contact us for assistance with your property portfolio optimization.