Cape Town vs. Johannesburg: Commercial Real Estate Market Comparison

Cape Town and Johannesburg are South Africa's two largest economic centres, each with a distinct commercial real estate landscape. Whether you're a business looking to expand, an investor considering your next opportunity, or a tenant navigating lease decisions, understanding how these markets compare can help you make more informed property choices.

While both metros play a vital role in driving the national economy, they differ in structure, pricing, and the types of commercial property that dominate. Here's a closer look at how Cape Town and Johannesburg stack up in 2025.

1. Market Structure and Business Focus

Johannesburg remains the financial hub of South Africa. It's home to the head offices of most major banks, corporates, and multinationals. Its commercial real estate market is heavily weighted toward high-rise offices in Sandton, Rosebank, and the broader Johannesburg CBD. The city also has the country's most extensive network of logistics and industrial hubs, including areas like Isando, Midrand, and the East Rand.

Cape Town, by contrast, has a more decentralised commercial market. While the CBD is still important, growth in Century City, Claremont, and the Northern Suburbs has created multiple self-sustaining commercial nodes. Cape Town's economy is more diverse, with strong tourism, tech, renewable energy, and creative sectors influencing office space trends. There's also a growing demand for warehousing and light industrial units in areas like Montague Gardens, Epping, and Airport Industria.

2. Office Market Dynamics

Over the past few years, Cape Town's office vacancy rates have consistently outperformed Johannesburg. According to recent data, Cape Town has among the lowest office vacancies of any major metro, driven largely by limited new supply, a strong SME presence, and ongoing demand in lifestyle-driven precincts like Century City and the V&A Waterfront.

Johannesburg continues to battle high vacancy rates, especially in Sandton, where oversupply and shifts in work habits post-COVID have left many buildings underutilised. Rental incentives and tenant installations are more generous in Johannesburg to help backfill empty space.

From a rental rate perspective, prime office space in Cape Town can cost more per square metre, but the total cost of occupation is often comparable once operating costs and incentives are factored in.

3. Industrial and Logistics Property

Johannesburg dominates the national logistics and warehousing sector due to its central location and access to major highways, rail, and air freight. The demand for large-format distribution centres continues to grow, particularly in areas like Midrand, Pomona, and Germiston. Many national logistics providers base their primary operations here.

Cape Town's industrial market, while smaller in scale, has experienced strong growth in recent years - especially for modern, well-located light industrial parks. Tenant demand is highest in areas with proximity to transport routes, such as Airport Industria, Parow, and Montague Gardens. New parks with secure access, high power supply, and fibre connectivity are leasing quickly.

For users requiring smaller footprints or flexible warehousing, Cape Town currently offers more diversity in unit sizes, especially in the 200-1,000 m² range. Johannesburg, by comparison, leans more heavily toward bulk storage and big-box logistics.

4. Pricing and Property Rates

As of 2025, Cape Town offers some of the lowest property rates among the major metros. This is despite rising demand and increasing rentals in core nodes. According to the City of Cape Town's latest budget data, property rates for commercial and industrial users are 42% lower than Johannesburg's on a like-for-like basis.

Johannesburg property rates are higher, but the city also offers larger scale leasing options and more generous tenant allowances in some areas. For corporates with a national footprint, the cost of doing business remains slightly lower in Johannesburg overall - but this is beginning to shift as Cape Town's infrastructure investments take effect.

5. Infrastructure and Municipal Investment

Cape Town is currently investing more into infrastructure than any other metro - approximately R39.7 billion over the next three years, compared to Johannesburg's R24.3 billion. Much of this is going into roads, safety, utilities, and public services to support the city's growing commercial zones.

Cape Town has also gained a reputation for more stable service delivery and better managed public utilities, a factor many businesses cite when relocating or expanding into the city. The City's efforts around urban precinct management, smart city integration, and incentives for green buildings have also strengthened the investment case.

Johannesburg continues to battle aging infrastructure, rolling blackouts, and issues with water delivery and waste management in certain areas. However, several private-public partnerships and improvement districts are helping to manage these challenges in key commercial nodes.

6. Tenant Trends and Occupier Expectations

Tenants in Cape Town are placing a premium on security, location, and the quality of their working environment. Many are downsizing to smaller, better-located offices or moving into mixed-use precincts with retail, residential, and wellness offerings nearby. This lifestyle-led shift is a big driver of growth in areas like Century City, which offer a blend of convenience and connectivity.

In the Johannesburg market, cost control is still a key driver. Many tenants are using current market conditions to negotiate flexible leases, consolidation opportunities, or large sublease deals. However, there is renewed interest in certain A-Grade spaces in Rosebank and Fourways, where office parks are modern, accessible, and tenant-friendly.

Both markets have seen increased demand for turnkey and fitted-out solutions, particularly from companies looking to avoid capex outlay during uncertain economic periods.

7. Investment and Development Activity

Cape Town has attracted a steady stream of private investment in commercial and mixed-use developments over the last five years. Notable recent projects include Bridgewater One in Century City, the Harbour Arch precinct, and various light industrial parks across the Northern Suburbs.

Johannesburg, although still active, has seen slower speculative development. Many developers have held back due to high vacancies and economic headwinds. Most new activity is concentrated in high-performing nodes or built-to-suit developments for specific occupiers.

In both cities, green building certifications, solar integration, and ESG considerations are playing a greater role in attracting tenants and investors.

Which Market Is Right for You?

Choosing between Cape Town and Johannesburg for your next commercial real estate move depends on your business goals.

• If you need national distribution capabilities or want to be close to South Africa's finance and mining sectors, Johannesburg remains a key strategic base.

• If you're looking for lifestyle-driven precincts, reliable service delivery, and access to the growing tech and renewable sectors, Cape Town offers distinct advantages.

• For industrial users, both metros offer strong logistics nodes - but Cape Town provides more options for secure, flexible, light industrial space near core transport infrastructure.

Whether you're an owner, occupier, or investor, both markets have opportunities. The key is to work with advisors who understand the nuances of each area and can align your property strategy with market performance.