Even though residential developments dominated the record R12.8-billion investment across 29 property developments in Cape Town’s Central City Improvement District (CCID) 2025/26 pipeline, the number of commercial builds doubled compared with the previous year.
This is according to the recently launched State of Cape Town Central City Report 2025 – A Year in Review (SCCR 25), produced by the Cape Town CCID.
At least six developments – 21% of all the builds in the pipeline – are purely commercial, notes the report, with an investment value of R2.38-billion, with additional office space included in mixed-use projects.
CCID board chairperson and Boxwood Property Fund CEO Rob Kane says the commercial property sector is being shaped by strong demand for quality office space, limited new supply and continued investment in downtown Cape Town.
“These trends, together with the upgrading and repositioning of existing buildings, are creating further opportunities for the commercial sector and strengthening the CBD’s position as a business and investment destination.”
Cape Town continues to record the country’s lowest office vacancy rates, according to the South African Property Owners Association (Sapoa), outperforming South Africa’s other major metros.
The city recorded a vacancy rate of 6.1% in the fourth quarter (Q4) of last year, compared with 15.8% in Johannesburg and 12.1% in Durban.
By the end of Q2 this year, Cape Town’s metro vacancy rate had increased marginally to 6.2%.
Within the CBD, Sapoa recorded an office vacancy rate of 10% at the end of 2025, which is below the national rate of 12.8%.
This means the CBD itself had the second-lowest office vacancy rate among South Africa’s major CBDs, with this number edging up to 11.9% at the end of Q2 this year.
At the close of 2025, the CBD had 1 058 085 m² of office space, marginally up on the previous two years. This amounts to 39% of the total office space in the City of Cape Town.
Against this backdrop of relatively low vacancies and limited new office supply, Kane says demand is strongest for quality office accommodation.
He describes the market as increasingly dumbbell-shaped, with relatively few vacancies at the top and bottom ends of the quality spectrum, while B-grade buildings are experiencing greater pressure.
“There is limited availability of both P-grade and C-grade space. The shortage of C-grade space is partly a result of older buildings being acquired and redeveloped or upgraded for residential, apartment or hotel use, while some B-grade properties have not been modernised and have consequently struggled to remain competitive.”
Grade B offices are cost-effective commercial spaces that balance affordability and utility.
C-grade offices are older, budget-friendly commercial buildings that offer basic, functional workspace at the lowest rental rates in a market.
P-grade offices are top-quality, modern commercial buildings that serve as flagship properties in their market.
Parking Problem
Kane says there is demand for high-quality office accommodation with sufficient parking, particularly from larger corporates seeking a city-centre location.
“Driving and parking is a South African reality, even as Cape Town moves towards a more walkable CBD,” says Kane, arguing that restrictions on parking in Johannesburg contributed to the decline of the city’s CBD.
This is one of the primary reasons that Kane’s Boxwood is behind one of the largest commercial builds in the CBD in years, namely the R1.7-billion The Matrix.
In the planning phase, the skyscraper will add 2 000 m² of P-grade office space and 570 parking bays to the central city.
Set to dominate Strand street where it intersects with Bree street, The Matrix will also have a retail component. The project is scheduled for completion in 2029.
“Existing properties do not always have the capacity or parking ratios required to accommodate larger tenants.”
More Office Space on the Way
Commercial and mixed-use buildings, valued collectively at R6.162-billion and in various stages of development, are set to set to increase the CBD’s office space offering.
Two developments were completed last year – the renovation of Ninety One (R600-million, Growthpoint Properties), signalling the investment giant’s faith in the inner city; and a heritage renovation in Bree street, namely 93 Bree Workspace (R32-million, Neighbourgood).
Three other commercial developments are under construction. They include two more heritage renovations by Neighbourgood – 88 Loop Street and 67 Buitengracht Street (both R25-million).
Two of the four mixed-use developments in the property pipeline listed in the SCCR 25 report, collectively worth R1.48-billion, will also add office and other commercial space to Cape Town’s CBD tally.
Among these is City Park, the R1.3-billion renovation of the old Christiaan Barnard Hospital by Ingenuity Property Investments and Kasada Capital Management.
Due to come on stream in Q3 this year, the development will add 10 500 m² of P-grade office space to the heart of the CBD, while also contributing to its day- and night-time economy.
Kane says there is a multiplier effect of major developments and investment in the CBD.
“As prominent buildings are upgraded or new developments take shape, they create greater confidence in the area. If you upgrade your building, others want to do the same.”
