South Africa's commercial-property sector is facing increasing pressure as tenants push back against unsustainable rental growth and rising operating costs.
New Insights from the Inauguration of TPN Credit Bureau 2026 Voice of Commercial Tenant Report finds that more than half of tenants cannot afford annual increases of more than 4%, increasing the risk of lease renewals.
Drawing on feedback from 950 respondents across multiple sectors, the report highlights how high rents, utility costs, municipal billing concerns and property-related issues are reshaping tenant behavior and challenging traditional landlord strategies in a stressful economic environment.
At a time when macro-economic instability and infrastructure challenges are increasing financial pressure on South African businesses, the report provides a detailed analysis of the commercial ecosystem, examining everything from business confidence to technology adoption and lease-renewal intentions.
The report shows that the risk of non-renewal is no longer just a concern for struggling businesses, but is a structural reality for the 'neutral' majority. While 40% of tenants are satisfied with their premises, a significant 38% are in a neutral holding pattern.
This group represents renewal risk – tenants who are currently compliant and paying but lack the loyalty or financial headroom to absorb the traditional 8% increase. These tenants are carefully monitoring costs and are structurally prepared to pull out at the next renewal if market conditions or landlord flexibility do not improve.
The report highlights that the commercial landscape is being redefined by smaller, more proactive organisations. A clear trend towards right-sizing is evident, with almost half (47%) of all tenants securing space between 100 sq m and 500 sq m.
This is followed by the micro-occupancy segment, where 29% of tenants occupy premises of less than 100 square metres. This move towards efficiency is a direct response to the twin pressures of higher rental costs and rising operating expenses, which account for almost half (46%) of all challenges faced by tenants.
These two factors – intense price sensitivity and space contraction – are currently the defining forces reshaping the landlord-tenant relationship and challenging the traditional property investment model.
Regional sentiment: Office flexibility versus a fragile retail recovery
While the global narrative has often focused on the demise of the office, the South African context tells a different story. The office occupier sector is surprisingly positive in the report, with 34% of office tenants reporting a satisfaction rating of 4 out of 5 – the highest share across all sectors. Office tenants are also the most confident, with nearly 39% reporting a positive economic outlook.
In contrast, the retail sector remains in a fragile state. Retail tenants report a more negative economic outlook (33%) than the national average. Satisfaction in the retail sector is heavily concentrated in the “neutral” category (over 40%), suggesting that confidence in the physical retail sector is low.
The report notes that for retailers, rent increases are being felt sharply along with rising utilities and flat consumer demand, making them the most sensitive to renewal risk if business conditions worsen.
Operational constraints and infrastructure gap
Beyond the direct costs of rent, the report highlights significant frustrations regarding government, municipal and state dependency. Challenges associated with power supply, poor infrastructure maintenance and municipal service delivery failures accounted for 30% of the reported operational disruptions.
These issues, although often outside the landlord's direct control, are becoming the primary drivers of tenant dissatisfaction. For example, industrial tenants reported the greatest impact from power supply issues (18%), reflecting the critical importance of power to operational continuity. Meanwhile, storage and office tenants expressed concerns about building upkeep and municipal maintenance, suggesting that facility management is becoming a key difference in tenant retention.
There is also a clear interdependence between effective facility management and perceived utility supply challenges, with municipal ownership transferred to landlords if buildings are not maintained to tenant expectations.
renewal risk
One of the most sobering findings of the report is the renewal risk analysis, which suggests that renewal outcomes are no longer driven primarily by lease terms, but by perceived experiential value. The highest risk group for a landlord is not necessarily the vocal, dissatisfied tenant, but rather one who is 'neutral' in their satisfaction and facing a potential increase of 5% or more.
Even a 15-25% share of high-risk tenants could significantly impact vacancy levels and income sustainability, the report said. Similar growth strategies that intend to protect long-term, predictable property asset income are being viewed as higher risks in the short and medium term. For tenants, the findings emphasize that when landlords demonstrate flexibility and responsiveness, resilience to cost pressures improves.
Barriers to development and the role of technology
When asked to identify the three biggest obstacles to business growth, 22% of respondents cited the macroeconomic environment, including weak demand and low consumer spending.
This was followed by utility costs (17%) and regulatory complexity (13%). Interestingly, transportation and logistics (4%) and exchange-rate fluctuations (5%) ranked as the least impactful growth constraints for the majority, suggesting that businesses have adapted to these logistics and currency-volatility constraints, but are stranded by the cost of simply keeping the lights on.
Adoption of technology is emerging as a potential catalyst for growth. Nearly two-thirds of tenants reported that adopting technology in the past year has had a positive impact on their efficiency. However, the report also notes that many tenants have been slow to adopt tools that can address internal cost pressures and utility management.
Moving towards partnership model
Ultimately, 2026 Voice of Commercial Tenant Report This is an urgent call for a shift from a transactional mindset to a proactive partnership model. Tenants clearly link stronger landlord engagement with a desire for greater stability and renovation. Issues like rental affordability, billing transparency and quality of maintenance are no longer just nice-to-haves, but key pillars of an economy dependent on functioning property.
“The central message of this research is that managing emotions early is the difference between steady income and avoidable retirement,” says Waldo Marcus, director of TPN Credit Bureau.
“Renewal outcomes are increasingly driven by tenant perception of value and real affordability. To keep the commercial-property sector resilient, the broader ecosystem must address key pain points: rental flexibility, infrastructure reliability and active engagement.
“As renewal risk increases among neutral-rated tenants, the ability to interpret these sentiment signals will be the difference between maintaining occupancy and facing rising vacancies in the years to come.
“Landlords who identify and engage with cost-sensitive tenants in advance of renovation will be best placed to navigate the transformational journey commercial occupiers are facing as they move towards sustained growth in a fragile local and global economy facing both new and existing pressures.”
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