The Property Industry Group has announced an industry-wide assistance and relief package for retail tenants that are hardest hit by complying with South Africa’s lockdown in the face of the COVID-19 pandemic.
The initiative, which focuses principally on supporting affected SMMEs, also provides relief and assistance to all other retail tenants and will be rolled out by landlords nationally.
During the week of 23 March 2020, the major representative bodies for real estate in South Africa – the SA REIT Association (SA REIT), SA Property Owners Association (SAPOA) and SA Council of Shopping Centres (SACSC) – formed a collective, which has been coordinating its response to the COVID-19 pandemic, and specifically the economic effects of the 21-day lock down. The newly formed Property Industry Group collectively speaks for the commercial real estate sector in SA, which includes the country’s large property owners.
The commercial property sector makes a significant contribution to South Africa’s society, economy, tax revenue and employment. It is responsible for more than 300,000 jobs directly and indirectly in other sectors such as security, cleaning, hygiene and technical services, and building and construction.
The group has announced an assistance and relief package for the retail sector to provide support to those that need assistance the most. Although it’s primary focus is on SMMEs across all sectors, the group has also included providing support to large retailers affected by the lockdown. The initiative targets preserving jobs – for retailers, their suppliers and service providers. To qualify for the relief benefits, retail tenants will need to undertake not to retrench staff during the relief period.
Significantly, the package stipulates that all tenants whose accounts were in good standing at 29 February 2020, can be assured that there will not be any evictions for the next two months.
In addition, retailers prevented from trading in compliance with South Africa’s government-mandated lockdown (non-essential services), and in good standing at the end of February 2020, are offered some form of assistance from landlords. The extent of that relief depends on the severity of impact (see tables below).
For April and May 2020, retail landlords will offer relief in the form of rental discounts where rental will be waived partially or fully and interest-free rental deferments where the deferred rental will be recovered later over six to nine months from 1 July 2020 onwards. Rental includes rent, operating costs and parking rental but excludes all rates and taxes recoveries and utility cost recoveries, as well as insurance, which all tenants will be required to pay in full for April and May 2020.
Of course, each landlord can use their discretion in the relief and assistance that they give a retail tenant, but the property industry package stipulates the minimum that qualifying retailers can expect.
Landlords will, on a case-by-case basis, also consider providing relief for office, industrial and hospitality tenants where the lockdown severely impacted the tenant and where it is justified. These tenants will negotiate relief terms directly with their landlords.
Shopping malls accommodate a wide range of retail tenants affected by the lockdown and, when putting together the package, the property industry engaged with various groups of retailers to get their buy-in.
“We’ve seen retailers reverting to legal positions, but we don’t believe that litigation provides either side with timeous solutions needed to get through this unprecedented time. We need to stand together and find workable solutions that will benefit the country, protect jobs, and sustain our businesses through this challenging time. We believe what we are offering is balanced and addresses some of the key issues on both sides. It is an equitable way to protect both industries and, very importantly, looks after the drivers of employment creation – the SMMEs,” says Estienne de Klerk, spokesperson for The Property Industry Group and Chairman of the SA REIT Association.
This assistance package comes at a massive cost to the property industry, which faces its own dire set of challenges: “But it is necessary for those that need assistance to get it, and for the small retailers that need it the most to get the support they need. Now is the time for bigger and stronger companies to step up and form a buffer to protect smaller retailers as a collective so that we can all come out of this stronger,” says de Klerk.
The package assumes that South Africa’s lock down doesn’t extend beyond 21-days. “If this isn’t the case, it is critical for stimulus packages such as those provided by the Government, banking sector and Solidarity Fund to kick-in to weather this storm,” says de Klerk. The property industry package allocates less support to retailers that have insurance cover or receive relief from other sources in order to focus benefits on retail tenants that don’t qualify for other assistance.
Shopping centres play a huge societal role in the SA economy, providing goods, services and information to their communities. “Our shopping centres are strongly driven to be part of the solution, not only by giving people a safe and hygienic place to acquire essential goods and services but by protecting jobs and helping to get the country back on its feet as fast as possible after the lockdown. We have been overwhelmed by the goodwill of property owners, who have also offered over 400 sites to Government to use as possible temporary testing sites, hospitals or labs,” says de Klerk.
Overall, the property industry has over the last 25 years of South Africa’s democracy been at the heart of growth and development, making fixed direct investment in the form of world-class residential, retail, office and industrial properties. In the process, the industry attracted a diverse pool of local and international equity and bond investors. South Africa has recently seen a downgrade of its investment credit rating to junk status, which has been followed by a sell-off of local listed equity and bonds.
“It is important that business, labour, Government, banks and other investors take decisions that don’t jeopardise the country as an investment destination in the future when dealing with the COVID-19 pandemic. We believe our approach provides a level of certainty in the sector and protects an important part of the economy at a time when we most need that, and our options are quite limited,” says De Klerk
The payment for rental for the month of April and May 2020 should be done by no later than the 17th of April and the 7th of May respectively and apply to all discounts and deferrals.
The Covid-19 crisis will be looked back on as either a turning point in the way South Africa empowers the development and construction sectors to build or the point of the final demise of the strategic capacity of the civil and building construction sectors in South Africa, says Deon van Zyl of the Western Cape Property Development Forum (WCPDF).
During the Great Depression, the USA government came up with the New Deal Strategy that fast-tracked fixed-capital investment projects. This protected and grew the construction sector and, at the same time, enabled the sector to employ people desperate to earn wages.
The Covid-19 crisis gives South Africa the same opportunity, and we have a choice to grow ourselves out of this crisis or to accept the loss of a critical industry in South Africa.
The fixed-capital investment projects of both the private and public sectors depend on highly- professional built-environment professionals (architects, engineers, quantity surveyors and the like) and a high-quality construction industry (made up of building and civil works contractors with all the different trades and labour).
Both consulting and construction sectors work for clients in the public and private domain. And both sectors work on the principle of “no work, no pay”. Already, prior to Covid-19, the property development and construction industry was on the verge of collapse. With the further pressure that Covid-19 brings, and with no sector specific financial reprieve yet in sight from either government or financial institutions, this industry will collapse in South Africa. Therefore, rather than continue to weather the economic storm that will still be there post Covid-19, the professionals will simply leave to work elsewhere, and their investors will follow them. Critical knowledge and expertise stand to be lost to a country that desperately needs these skills.
Private sector projects reflect the economy and, at the moment, these were few and far between even before we headed into lock down. Which then raises the call for public sector projects to be fast-tracked as soon as the lock down ends to support the survival of the construction industry.
As the WCPDF, and in light of an even larger economic crisis which now faces us, we therefore call for the urgent review of the plethora of non-aligned statutory approval processes that hinder fixed capital investment. The ideal is a one-stop application process that deals with all aspects from land use rights and heritage considerations to environmental approvals and water use licences as a single application process.
Ongoing research work known as the Property Development Process Model and undertaken by the UCT Nedbank Urban Real Estate Research Unit (URERU) in collaboration with the WCPDF has already illustrated the inefficient and non-aligned applications to which both public and private sector fixed capital investment are subjected. As a result, what was once a one-to-two year application and approval process now extends on average up to five years and longer (before construction even begins), at a time when any individual approval may lapse whilst still awaiting a further approval under different legislation. And the risk of rights lapsing is only one of a multitude of red tape legislative processes to which both private and public developments (the latter including critical infrastructure development such as roads, sanitation, schools and hospitals) are subjected.
It’s been time for a while now to clean up and align this quagmire of different legislation that actively hinders investment and service delivery. Add Covid-19 into the mix and we have an industry that now totters on the brink of falling into the mire.
Application processes take years and should be reduced to months if not weeks. Particularly in times of economic crisis when the poorest members of our community sit at home or at the side of the road instead of being gainfully employed on a construction site.
Public projects that have been budgeted for should especially be fast tracked and implemented. Surplus cash available in municipalities such as City of Cape Town (a staggering amount of R5.3 billion in cash and cash equivalents, at last count) should be directed towards bulk infrastructure projects that support both local and surrounding municipalities. Provincial funding and delivery capacity should be shared across provincial boundaries to assist those provinces that have fallen behind with infrastructure delivery.
The rule-by-auditor culture that seems to have captured the state (and by this we mean from municipal to provincial to national level) must be terminated. Procurement requirements and processes must be reduced to the assessment of reasonable price offering and the ability to implement capital projects. Implementation a delivery must now be the New Deal for South Africa.
We cannot audit ourselves out of this crisis. Appropriate measures must be put in place to address opportunism. Theft of public funds is akin to an act of treason and must be dealt with harshly.
It is time for South Africa to table this New Deal and use this crisis to change direction and create a truly investment-friendly and delivery orientated society. Now is the time for the construction sector to do what it does best: to build.
About the author: Deon van Zyl has been the chair of the WCPDF since 2011, and is the CEO of project management company Alwyn Laubscher & Associates (AL&A).
In her studio in downtown Portland, Oregon, fashion designer Sloane White has been sewing cotton masks nonstop since her commissions dried up and she was laid off by the suit shop where she works.
In Brooklyn, Naomi Mishkin, the designer behind a made-to-order garment line, is hoping for a breakthrough in her quest to source materials to convert her Manhattan production operation into a factory for medical hoods.
And in Baltimore, a maker space called Open Works is coordinating a collaborative community effort to generate the components for face shields by deploying 3D printers across the city.
Two weeks into the campaign to flatten the curve of the coronavirus pandemic, people across the country are ramping up their efforts to manufacture the personal protective equipment that hospital workers desperately need, as well as the precautionary gear that the rest of us ought to be using.
Makers know they can’t turn the tide. They aren’t able to match the level of mobilization envisioned by the Defense Production Act, the Korean War-era law that the Trump administration has used (however falteringly) to order American factories to start churning out ventilators and respirators at scale.
“As one of my coworkers asked: Are we trying to save the farm with the BB gun here?” says Ryan Hoover, faculty in interdisciplinary sculpture and digital fabrication at Maryland Institute College of Art. “We’re trying to fill the gap, but we need manufacturers to step up. We need that. These are great rapid response technologies, but they are not equipped to deal with the scale that we need.”
Yet the demand for medical supplies has so wildly, dramatically outpaced production that the need is everywhere. The global coronavirus pandemic has ruthlessly revealed the vulnerabilities of the modern supply chain, which relies on offshore manufacturing and “just-in-time” delivery, leaving little room for error when demand suddenly surges worldwide. And that demand tracks at all levels of conceivable necessity, from the ventilators that keep desperately ill Covid-19 sufferers alive to the masks that offer some peace of mind and a modicum of protection to grocery-store workers and shoppers.
In this environment, local producers are mobilizing to answer need where they can find it, doing what they can to turn hyperlocal capacity into distribution networks that serve neighborhoods. For adherents of the maker movement, who have promoted the idea of collaborative DIY manufacturing as a means of community empowerment, the coronavirus crisis represents an opportunity to demonstrate exactly why making stuff can be so powerful. It might not be Dunkirk, exactly, but makers are rising up to play a life-saving role in this global struggle.
In February, White brought her couture line to the runway at London Fashion Week. In fact, the Portland fashion designer’s custom gowns and dresses, made from 100% reusable materials, closed out the show — a high point in her career.
By mid-March, though, all her own couture commissions were either put on hold or canceled. And the made-to-measure suit shop where she works, Indochino, closed its doors. Like so many other Americans, White found herself out of a job. But she had a ton of quilters cotton on hand — material she had been saving for her ready-to-wear line of summer dresses. And her sewing machine, a Pfaff Creative 7550, is a real workhorse. As long as she was going to be holed up in her home studio in Portland’s Goose Hollow neighborhood, she decided to put herself to work.
She’s now putting 10 to 14 hours a day in to make sewing masks for anyone who asks. She’s made more than 800 so far. “If I can do something that can help in any way at all, I’ll do it. It feels better than being helpless.”
The cotton masks that White produces — two layers of 100% cotton in four very au courant panels — aren’t the medical-grade N-95 respirators that hospitals need so badly, but now that the Centers for Disease Control and Prevention is recommending cloth face coverings for all, orders are pouring in, through Facebook and word of mouth. White sent one batch of 200 masks to Legacy Meridian Park Hospital, at the request of cafeteria staff who aren’t being outfitted with the proper medical-grade PPE. Another shipment of masks went to a nursing home.
“I just looked online at some photos of the pattern, and then I just figured it out from there,” White says. “As long as I can keep getting fabric there’s no reason to stop.”
Other makers who have joined the campaign to produce medical equipment have access to proper factories. Naomi Mishkin, the designer and founder behind Naomi Nomi — a made-to-order workwear line for women in New York City — is one of a small number of designers that still produce all of their garments in America. In any normal spring, she would spend the last week of March head down in full production mode. Plans to put out work-appropriate bike shorts, a tank top, and a dress with seven pockets were next up for her company. Everything the line produces happens between her Brooklyn studio in Prospect Lefferts Gardens and two facilities on 35th Street in Manhattan’s Garment District. But now Mishkin is pivoting to produce PPE that doctors can use.
“I was watching [New York Governor Andrew] Cuomo’s press conference and texting with the head of one of our factories,” Mishkin says. “I’d been in contact with him hour to hour over the last 10 days. I texted him: ‘We’re making masks, aren’t we now?’”
Production on the many-pocketed dress came to a grinding halt, and Mishkin and her fabrication partners began to plot out how to retool their operation. The factories in the Garment District aren’t capable of producing N95 masks, but they have the capacity for something more industrial than cotton masks. After talking with an anesthesiologist, Mishkin and her partners came up with a plan to manufacture fabric hoods with plastic face shields that can be used by clinics and hospitals.
If Naomi Nomi can figure out the plastic and the fabric (a nonwoven, nonporous material), then her line alone could churn out thousands of medical hoods in short order. Today, Mishkin, like almost every other small business in America, is figuring out how the Paycheck Protection Program works, but she thinks that Naomi Nomi is close to a breakthrough — there’s a textile manufacturer in Long Island that might be able to provide the right fabric.
“Our biggest concern is getting the material. The patterns for gowns, that’s very easy,” Mishkin says. “We’re talking about factories that can turn out three-piece suits. Making a medical gown that’s technically supposed to be disposable is extremely easy from an engineering standpoint.”
For fabricators who can produce medical supplies at some level of scale, figuring out the supply chain can be a serious impediment. There’s need for manufacturers who can answer the government’s call for making ventilators, but manufacturers also need a way to suss out the new pandemic wartime logistics.
“It’s one of the things that people haven’t grasped: You need to consider the entire supply chain,” says Mike Galiazzo, president of the Regional Manufacturing Institute of Maryland. “Somebody could be making a mask or even making a ventilator, but if they don’t have the capacity coming through their supply chain, they’re really not useful in fighting coronavirus.”
In Maryland, the Regional Manufacturing Institute is trying to thread this needle with a database called Maryland Made to Save Lives. It allows local companies to declare what kind of manufacturing they can do — injection molding, for example, which is necessary to produce some personal protective equipment — and lets other companies source the supplies they need.
For example, a Baltimore-based company called Marlin Steel Wire signed up on RMI’s directory. The company makes wire baskets and other steel-form products. A medical group contacted Marlin Steel Wire with an urgent request for wire racks to hold test tubes; lab techs need something to hold all those coronavirus tests. The company is now manufacturing autoclave baskets, wash racks, sterilizing baskets, and other products for clinics and hospitals. “A steel company can be an important part of the battle,” Galiazzo says.
The Maryland Made to Save Lives database caught the attention of Hoover, who works in the digital fabrication studio as a faculty member at the Maryland Institute College of Art. He’s one of hundreds of people working in tandem with a Baltimore maker space, Open Works, to manufacture face shields via 3D printers. These makers are building their own networked chain in order to help out local health care workers, an initiative that he hopes to link up with the broader manufacturing mission.
Hoover joined the 3D-printing campaign after Open Works put out a call for face shields on behalf of LifeBridge Health, a health care nonprofit based in Baltimore. “There was an overwhelming response to the call,” Hoover says. “I think it’s one of few cases where we’ve had a similarly exponential response to the virus. One person wrote multiple people, and they wrote multiple people.”
More than 250 printers across Baltimore are now using a schematic for face shields designed by Prusa Research, an open-source 3D-printing company based in Prague and an industry leader. MICA’s engineer in residence, Paul Mirel, for example, is using a laser cutter at home to cut face shields. To coordinate this volunteer army, the Open Works makers are deploying an online tool called We the Builders. This site was made to help organize community printing projects, typically artworks, where everyone prints a different part of the whole; the Baltimore makers are using it to assign out and print components of face shields.
“It’s definitely not a perfect system,” Hoover says. “It’s not really how you’d design a system for this, but it’s a system that does most of what you need.”
The Baltimore initiative, led by Open Works director Will Holman, is part of a global push to mobilize 3D printers. Makers and manufacturers around the world are rallying to turn this technology into a massive wave. Just the latest example from my inbox: Camper, a Spanish shoemaker, is using its company’s 3D printers to churn out face shields and (pending medical approval) components for ventilators.
There are countless examples of everyday people stepping up to do their part to combat the coronavirus pandemic. Even knowledge workers. Kyle Wiens, a right-to-repair advocate based in San Luis Obispo, California, is tracking down and publishing service manuals for ventilators, since keeping them running will be as critical as putting them in place. These individual efforts are contributing to the local, regional and national campaigns to arrest the virus.
Parts of the new maker economy are building entirely new networks in order to contribute. There’s a fire underneath old-school manufacturing, too. Galiazzo says that if there’s one bright spot to factories turning on a dime to build new medical supplies, it’s that today’s crisis will help companies adjust to new standards of communication and digitization. “When we get out of this mess, we’re going to see that there’s a real benefit to accelerate our march toward Industry 4.0, which is all about the digital society,” Galiazzo says. “There’s going to be huge shifts in how businesses are organized to do work in the future.”
In the coronavirus era, there’s an advantage to having a regional manufacturing center, especially for cities that have been written off as post-industrial dead zones. If Rust Belt builders can shake off their rust, then they may be critical production centers for the home front. There’s no question that major manufacturers such as Apple and GM can bring tremendous corporate resources to bear. But if the federal government is outbidding states for medical equipment, then the distribution of these resources is at the mercy of the Trump administration. Even as some cities and states worry where they stand in the queue being overseen by the president’s son-in-law, Jared Kushner, many workers know that they won’t be getting the equipment they need in time.
Working together or going it alone, makers are giving what they can, despite a lack of clear instructions or assistance from the government. But then, a certain loose adherence to the rules of officialdom has always been part of the movement’s ethos.
“It seems like a very Baltimore thing to me,” Hoover says. “We’re used to the powers-that-be that were supposed to do a job not doing their job.”