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# Why the mood in commercial property just soured overnight
- URL: https://www.businessbagel.com/why-the-mood-in-commercial-property-just-soured-overnight/
- Published: 2026-07-21T02:45:00.000Z
- Updated: 2026-07-21T02:44:59.000Z
- Description: FNB's brokers went from upbeat to gloomy in a single quarter as war-driven costs and rate fears bit.
- Author: Christian Maidman
- Tags: Economy, Business Bagel News

South Africa's commercial property recovery has hit a wall. FNB's latest broker survey shows satisfaction with the market crashing to 39% in the second quarter of 2026, down from 69% just three months earlier, as a weaker economy and geopolitical tension knocked business confidence.

FNB senior economist Siphamandla Mkhwanazi ties the slump to higher operating costs linked to the Middle East conflict and the interest-rate response that followed. It is the same deterioration showing up across the wider economy, not a property-only wobble.

## Offices, still the problem child

The weak spot stays where it has been for years: offices. Empty desks, limited tenant expansion and hybrid working keep dragging on demand. In Johannesburg, landlords are giving up on some buildings altogether, with residential and mixed-use conversions now making up about 43% of office deal activity as owners repurpose space nobody wants to rent.

## Where it is still working

It isn't all gloom. Industrial and logistics stayed the strongest corner of the market, propped up by demand for warehousing and supply-chain space. Retail kept recovering too, with Cape Town and Nelson Mandela Bay leading the way.

FNB still sees the broader economy inching forward, from about 1.1% growth in 2025 toward 1.2% this year. But until the rate picture settles, brokers are likely to stay cautious, and the office market will keep testing how much reinvention it can take.