Western Cape BPO sector witnesses significant expansion in office real estate
Growing Demand for Call Center and BPO Office Spaces in the Western Cape
The Western Cape region, particularly around Cape Town, is experiencing a surge in demand for call center and Business Process Outsourcing (BPO) office spaces, driven by an expanding BPO sector in the area.
This growth is evident as BPO companies establish facilities in different parts of the province to meet rising operational demands. Sourcefit, a Philippines-headquartered BPO firm, recently opened its doors in De Waterkant, adding to the growing number of BPO companies in the region.
The BPO sector has become a major driver of office commercial property occupancy post-pandemic, accounting for 60% of net office space absorption over the past 18-24 months in Cape Town. This trend is expected to continue, with the BPO sector projected to add over 11,000 jobs this year and employing at least 90,000 people in the Western Cape.
The sector's expansion has led to the emergence of nodes in Century City, Salt River, Wynberg/Claremont, and the Cape Town CBD. However, the CBD is close to reaching peak capacity, and its office towers are not suitable for call centers due to space constraints. As a result, BPO operators are moving outside of the CBD to reduce traveling time for staff and transport costs.
UK operator Sigma Connected set up a call center in Paarl, creating 250 jobs in the first phase and planning to grow to around 1,000 roles in the coming years. Wipro, an Indian BPO giant, set itself up in Century City in 2023. Call centers are also being set up in Diep River, Mitchells Plain, and Retreat due to high commuting costs for employees.
However, setting up call centers in townships presents challenges. Crime and safety issues persist in some poorer township areas, despite progress in reducing crime in Cape Town overall. Logistical complexities related to transportation and infrastructure in townships can also affect workforce reliability and supply chain efficiency.
Despite these challenges, industrial and commercial real estate investments are actively occurring in the Western Cape, indicating a healthy property market that can support business expansion, including call centers. Consistent property price increases reflect investment confidence and commercial property demand, which positively impacts office space availability and rates relevant to the call center sector.
The lack of facilities in industrial areas can hinder the success of a call center setup. Currently, there are no incentives by municipalities around the country to set up call centers in townships. Establishing call centers in townships requires a lengthy rezoning process, establishment of infrastructure, and commercial risk.
In summary, while there is a clear upward trend and promising future growth for call center spaces in the Western Cape, particularly around Cape Town, operators setting up in townships must navigate crime-related risks and infrastructure challenges to capitalize on these opportunities.
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