BPO Western Cape: Office property growth surges
Demand for call centre space has seen BPO operators set up across the region
By Staff Writer
THE growth in the international Business Process Outsourcing (BPO) sector in the Western Cape has seen it become a major driver in office commercial property occupancy in the region, post-pandemic.
The COVID pandemic, along with the work-from-home trend, knocked commercial property, but the move by global BPO operators to set up call centres that service international companies in South Africa has driven office occupancy.
BPO Western Cape office demand rises
Catalyst Fund Managers’ bi-annual dashboard local listed property report for the first half of 2024 said: “The BPO sector accounted for 60% of net office space absorption over the past 18-24 months in Cape Town and as space runs out and rentals increase, there is potential for the expansion to spill over inland to oversupplied markets such as Gauteng.”
For its part, Rode’s Report on the South African Property Market 2024:1 said that “the BPO sector was booming and that it already employed at least 90 000 people in the Mother City.”
Rode, for example, pointed out that Philippines-headquartered BPO firm, Sourcefit, opened its doors in De Waterkant in March 2024, and that India’s Wipro set itself up in Century City in 2023.
Call centre space demand expands
CapeBPO CEO Clayton Williams said demand has not slowed down and that this has seen the emergence of BPO nodes in Century City, Salt River and Wynberg/Claremont, in addition to the Cape Town CBD.
Williams pointed out that the sheer number of people getting employed was driving demand for office space. With about 10 500 people getting employed in the Western Cape in 2024, and each of these people each needing about 10m² of space, this meant office space of 105 000m² was needed to house these new employees.
When looked at this way, the BPO sector needed to find over 100 000m² of office space every year since the end of the pandemic, as the sector has grown by about 10 000 seats a year since then.
Office space expansion challenges
It showed no signs of slowing down, as it’s on target to add over 11 000 jobs for this year.
The Cape Town CBD is not only close to reaching peak capacity, its inventory of office towers is not suited for call centres.
Investicore chief operating officer Kevin Padayachee said the CBD tended to have “small tall buildings” that only had a capacity of 500m² to 800m², whereas a call centre needed about 3 000m².
Aside from space constraints, BPO operators are also moving outside of the CBD as a way to reduce travelling time for their staff and transport costs.
Call centres moving beyond CBD
Though operators are also open to setting up call centres in townships, where most of their staff are based, Williams and Padayachee agreed this was easier said than done.
Williams said this would require a lengthy rezoning process, as well as the establishment of infrastructure to support up to 1 000 people. Padayachee said there was also commercial risk, as a BPO operator would likely have to invest in the call centre itself, and the only likely buyer would be another call centre operator.
Padayachee said people and operators also want to be based in places where they have convenient facilities, like eating places, stores and transport hubs.
This could be seen when Investicore came up with an offering to set up a call centre in an industrial area. It ticked the boxes for lower rentals, reduced transport cost and commute times, but the lack of facilities did not see this offering get off the ground.
The importance of having call centres close to facilities is only going to grow, given the growth in US operators setting up in South Africa. Williams said, given the time difference, these centres would be operating at night, meaning the staff’s needs would have to be catered for.
As things currently stand, there are also no incentives by municipalities around the country to set up call centres in townships.
Even so, the Rode report noted that call centres were now being set up in Diep River, Mitchells Plain and Retreat because of the high commuting cost for employees. The move away from the city centre could also be seen in UK operator Sigma Connected setting up a call centre in Paarl in January.
The group said at the time, the location, only 45 minutes from Cape Town, meant less of a commute for people in the area, and the feedback so far had been exceptional, as they were excited to be part of a rapidly growing business and industry.
This centre would create 250 jobs in the first phase and grow to around 1 000 roles in the coming years.
