The Rode Report is one of the most widely used sources of market evidence in South African commercial property. Valuers, municipal valuers, landlords and brokers all lean on its vacancy rates, capitalisation rates, rentals and operating cost figures, and it regularly appears in property valuation reports, municipal valuation objections and Valuation Appeal Board submissions.
We read the four most recent quarterly issues side by side: Rode Report 2025:3, 2025:4, 2026:1 and 2026:2, which together cover the 2025/26 municipal financial year from 1 July 2025 to 30 June 2026. Rather than summarise each issue on its own, we followed the same measures from issue to issue to see what moved, by how much, and what sits behind each number. This article sets out what the reports show on office vacancies, capitalisation rates, operating costs, industrial property and apartments, and then poses some questions that we believe every user of survey data should keep in mind.
Why Market Data Matters for Every Property Valuation
Whether a property is being valued for a purchase or sale, for financial reporting, for insurance, for a deceased estate or for municipal valuation purposes, the valuer relies on the same building blocks of market evidence: market rentals, vacancy allowances, operating costs and capitalisation rates. For income-producing commercial property, such as offices, industrial buildings, shopping centres and apartment blocks, the income capitalisation method is the standard approach, and small changes in these assumptions can move a valuation significantly.
To illustrate, a property with a net annual income of R1 000 000 is worth about R9 090 909 at a capitalisation rate of 11.0%, but about R8 695 652 at 11.5%. A difference of half a percentage point in the cap rate changes the value by about R395 000, or roughly 4%. That is why it matters where market figures come from and how reliable they are for the property and date being valued.
Where the Numbers Come From
Rode Publications compiles the Rode Report every quarter, largely from surveys of a panel of property professionals, including brokers, valuers, asset managers and property managers. Its headline capitalisation rates and vacancy figures are described as the opinion of that panel, while its rental and outgoings tables are compiled from responses by brokers in each node. That approach gives a timely, well-informed read of market sentiment across the country, which is difficult to obtain any other way. It also means that each figure is only as robust as the number and mix of the responses behind it, a theme we return to at the end of this article.
The reports are subscription publications, so we refer only to a limited number of headline figures, attribute each one to the issue it comes from, and leave the full tables and charts to the originals at rodemedia.co.za. The commentary and interpretation are our own.
Office Vacancies: A Gradual Recovery
Rode’s national office vacancy rate covers grades A’, A and B space combined in decentralised nodes, excluding the old central business districts. Across the four issues, it improved steadily against the same quarter a year earlier:
| Rode Report | Decentralised office vacancy | Same quarter a year earlier | Improvement |
| 2025:3 | 12.3% | 13.3% | 1.0 point |
| 2025:4 | 11.7% | 12.5% | 0.8 point |
| 2026:1 | 11.7% | 12.8% | 1.1 points |
| 2026:2 | 11.6% | 12.9% | 1.3 points |
Rode also reports an average of 12.4% for calendar 2025, down from 13.2% in 2024 (2025:4). Over the four issues, vacancy fell by 0.7 of a percentage point, although 0.6 of that came in a single step between the third and fourth quarters of 2025, followed by three almost unchanged readings.
Rode attributes the recovery to employees returning to physical workplaces, somewhat better economic growth and very little new office development, while older buildings are increasingly being converted to other uses. Cape Town continues to have the lowest vacancies of the major cities. In Pretoria, decentralised vacancy averaged 11.5% in the second quarter of 2026, down from 13.6% a year earlier (2026:2).
Despite the improvement, the national rate remains above the 10.5% recorded before COVID-19 in 2019 and above the long-term average of 9.6% that Rode calculates from roughly 26 years of SAPOA data. Rode makes a point that valuers should note: when capitalising an office income stream in perpetuity, it suggests using the long-term vacancy average rather than the latest quarterly reading. In other words, the vacancy allowance in an income valuation is a long-run assumption, not a snapshot.
Capitalisation Rates: Stable Despite Falling Bond Yields
If vacancies tell a story of slow improvement, capitalisation rates tell one of stability. Rode’s national weighted cap rates barely moved across the four surveys:
| Rode Report | Grade-A decentralised offices | Prime industrial leasebacks | Regional shopping centres |
| 2025:3 | 11.1% | 9.4% | 9.1% |
| 2025:4 | 11.2% | 9.3% | 9.3% |
| 2026:1 | 11.1% | 9.3% | 9.1% |
| 2026:2 | 11.0% | 9.3% | 9.0% |
No series moved by more than 0.3 of a percentage point, and Rode described the market as stable or moving sideways in every issue.
What makes this interesting is that the usual drivers of cap rates were not standing still. Rode reports that long-bond yields averaged 9.9% in September 2025, down from 10.3% in December 2024 (2025:3), and had fallen further to 8.6% by January 2026 (2025:4). Lower government bond yields would ordinarily pull property yields down, because investors compare the two. Rode’s explanation is that better property fundamentals were offset by uncertainty about local and global economic prospects and by geopolitical tension.
That uncertainty then became concrete. The 2026:1 issue describes how the conflict in the Middle East that began in late February 2026 revived inflation concerns and reversed earlier market expectations of up to two interest rate cuts in 2026. One Rode panellist observed that appetite for office space had returned on the expectation of rate cuts, only to be paused by the conflict. By the 2026:2 issue, Rode reported that the office market had held steady with little impact from the conflict so far, but that the prime rate had risen to 10.5% in July 2026 from 10.25% in April, and it expected cap rates to keep moving sideways until the outlook for oil prices, inflation and interest rates becomes clearer.
There is also a quieter structural trend. Industrial leaseback cap rates declined during 2024 and have held at those lower levels since, and they now sit close to those of regional shopping centres. Investors appear increasingly willing to price well-let industrial income on similar terms to retail income.
Operating Costs and Gross Outgoings
Vacancy and cap rates attract most of the attention, but outgoings determine how much of the rental actually reaches the owner. Rode publishes two relevant tables for offices: the expected escalation rate on operating costs by node, and typical gross outgoings for prime office buildings as reported by brokers, in rand per rentable square metre per month.
Escalation expectations
Across the Johannesburg nodes, expected operating cost escalations sat mostly between about 7.3% and 8.3% in each issue. Sandton CBD was 7.7% in 2025:3 and 7.4% in 2026:2, while Randburg Ferndale moved from 7.8% to 8.3%. By comparison, Rode reports that consumer inflation averaged 3.2% in 2025, down from 4.4% in 2024, before rising to about 5% by the second quarter of 2026. Expected cost escalations of roughly one and a half to two and a half times inflation are consistent with municipal rates, electricity and water tariffs rising faster than CPI. Rates and taxes form part of outgoings, and a municipal rates account is one of the few cost lines that can be formally challenged.
Gross outgoings in selected Johannesburg nodes
| Node (R/m² per month) | 2025:3 | 2025:4 | 2026:1 | 2026:2 |
| Sandton CBD | R55.83 (3) | R59.88 (4) | R64.78 (5) | R63.40 (5) |
| Rivonia | R37.63 (6) | R35.96 (6) | R35.33 (3) | R39.40 (4) |
| Wierda Valley | R41.17 (3) | R45.83 (3) | R45.83 (3) | R44.17 (3) |
| Woodmead | R39.64 (5) | R37.64 (5) | R44.50 (4) | R40.54 (5) |
| Fourways | R36.83 (3) | R36.83 (3) | R36.83 (3) | R40.17 (3) |
| Melrose Arch | R45.00 (1) | R42.50 (2) | R55.00 (3) | Not reported |
Figures in brackets are the number of broker responses Rode reports for each node. Source: Table 5.8 in each issue.
Sandton CBD outgoings rose by about 16% between the 2025:3 and 2026:1 issues, from R55.83 to R64.78, while the escalation expected for that node never exceeded about 8% a year. Over the same period, the number of broker responses rose from three to five. Elsewhere, Melrose Arch moved from R42.50 to R55.00 in one quarter, Woodmead rose by about 18% in one quarter and fell back the next, and Rivonia’s figure moved with a change in the number of respondents from six to three to four. Movements of this size are best read alongside the number of responses behind each figure, as discussed below.
Industrial Property: Still the Standout
Industrial property remained the strongest sector in the reports. Rode puts national industrial vacancy at about 4% in the first and second quarters of 2026, compared with 3.7% and 3.8% a year earlier, and notes that while vacancy has hovered near 4% for several years, it appears to be edging up slowly. Rental growth stayed well ahead of inflation: nominal gross market rentals for 500 m² units grew year on year by 8.4% in the third quarter of 2025, 8.1% in the fourth, 6.6% in the first quarter of 2026 and 7.2% in the second. Rode reports that the Middle East conflict has so far had little effect on the industrial market.
Apartments: The Biggest Vacancy Movement
Apartments showed the largest change in vacancy of any sector. Rode’s national weighted apartment vacancy, which includes data from members of the South African Multifamily Residential Rental Association (SAMRRA), moved as follows: 5.4% in the third quarter of 2025, 5.3% in the fourth, 4.4% in the first quarter of 2026 and 3.9% in the second, a fall of 1.5 percentage points, almost all of it in the first half of 2026. Gauteng apartment vacancy fell to 3.8% in the second quarter of 2026, while the Western Cape has remained between 1% and 3% since 2023.
For SAMRRA members’ blocks alone, Rode reported vacancy of 5.2% in 2025:3, 4.9% in 2025:4, 3.8% in 2026:1 and 3.4% in 2026:2. Non-SAMRRA apartments, which broadly include smaller private landlords and sectional title units, were reported at 6.5% in the fourth quarter of 2025 and 5.9% in the second quarter of 2026. Rode also surveyed apartment block capitalisation rates for the first time in the third quarter of 2025, as part of its collaboration with SAMRRA.
Some Questions Worth Asking
The Rode Report is one of the few consistent, quarterly sources of market data in South Africa, and the questions below are not a suggestion that its figures are wrong. Rode itself notes that some node figures may be inconsistent because of small sample sizes, and that its newer apartment data should become more representative as the sample grows. With that in mind, these are the questions any user of survey data, whether an owner, a valuer, a municipal valuer or an appeal board, may wish to ask before relying on a particular figure.
How many responses sit behind the figure?
Rode publishes the number of respondents alongside many of its tables. For gross outgoings, most nodes rest on between one and six broker responses, and a number of nodes are left blank. Regional and node cap rates are also based on a relatively small number of panellists. How representative can a single figure be when it reflects a handful of opinions, and how much could it change if one respondent joined, left or changed their view?
Does a large movement reflect the market or a change in the sample?
Some figures move further in one quarter than the underlying market may have moved. For example, Sandton CBD gross outgoings rose by about 16% over two quarters, while the expected cost escalation for that node was about 8% a year, and over the same period the number of responses rose from three to five. When a figure moves sharply at the same time as the number of respondents changes, how much of the movement is the market and how much is the sample?
What happens when no new information is received?
Some node figures are the same from one issue to the next, which may simply mean that respondents’ views have not changed. When no new response is received for a node, is the previous figure retained, and would a reader be able to tell?
Are earlier figures ever updated?
Survey data is sometimes refined after it is first published. If an earlier quarter’s figure is updated, how is that communicated, and which figure should a valuer rely on?
How much of a trend comes from changes in the data sources?
New data sources continue to be added, such as SAMRRA apartment data and the first survey of apartment cap rates in 2025. Where a new group of contributors reports different levels from existing respondents, could part of a change in the national average reflect the mix of contributors rather than the market itself?
Is opinion keeping pace with transactions?
Cap rates and vacancy rates reflect the opinion of a panel, and several charts are smoothed and weighted. Opinion surveys capture market sentiment well, but do they lag or lead actual leasing and sales, particularly when conditions change quickly, as they did in early 2026? And how are the weights set and revised?
So, is the Rode Report an accurate reflection of the market?
It remains a fair general guide to where the market sits and the direction in which it is moving, particularly for national and metropolitan trends that are consistent from issue to issue, such as the steady office vacancy recovery and the stability of cap rates. It is less suited to being read as a precise measure for an individual node in a single quarter, where a small number of responses can produce movements that may not reflect the market.
A Guideline, Not a Substitute for Evidence
Publications such as the Rode Report should be used as a guideline only. When valuing a property, whether for a sale, financing, financial reporting or a municipal valuation objection, it is important to do your own research using actual leases, operating cost records and comparable transactions, or to have a professional valuer assist you.
What This Means for Owners and Valuers
Market surveys are a valuable starting point, but they are not a substitute for evidence about the property being valued. Four practical points follow from the year’s data.
- Match the evidence to the valuation date. A municipal valuation reflects market conditions at the roll’s date of valuation, and a survey published this quarter describes this quarter. When testing a municipal value, use survey data from the period that matches the roll. Our guide to the meaning of a valuation roll explains why the date of valuation matters.
- Treat node figures as a range, not a point. Where a node figure rests on one to six responses, check the number of respondents and the standard deviation before relying on it, and look at the trend over several issues rather than a single quarter.
- Give more weight to property-specific evidence. Actual leases, operating cost records and comparable transactions should carry more weight than a survey average. Rode’s own advice to use the long-term vacancy rate when capitalising income in perpetuity is a sensible discipline.
- Remember that rates sit inside outgoings. With operating costs expected to escalate well ahead of inflation, it is worth checking the value and category behind your municipal rates account. Our property rates calculator shows what a change in municipal valuation could mean for your rates.
Campbell Property Consulting provides commercial property valuations across South Africa for purchases and sales, financial reporting, insurance, deceased estates and municipal valuation purposes, including objections and appeals. To discuss a valuation, contact Campbell Property Consulting.
Frequently Asked Questions
What is the current office vacancy rate in South Africa?
Rode reported an average vacancy rate of 11.6% for grades A’, A and B space combined in decentralised nodes in the second quarter of 2026, down from 12.9% a year earlier. Cape Town has the lowest vacancies of the major cities.
What are current capitalisation rates for commercial property in South Africa?
In Rode’s second-quarter 2026 survey, national weighted cap rates were 11.0% for grade-A decentralised offices, 9.3% for prime industrial leasebacks and 9.0% for regional shopping centres.
How much did vacancies and cap rates change in 2025/26?
Office vacancy fell by 0.7 of a percentage point and apartment vacancy by 1.5 points across the four issues, while industrial vacancy edged slightly higher. Cap rates were essentially unchanged.
Which property valuations rely on market data like this?
Most valuations of income-producing property do, including valuations for a purchase or sale, financial reporting, insurance, deceased estates and municipal valuation purposes. Rentals, vacancy allowances, operating costs and capitalisation rates all feed into the income capitalisation method, which is the standard approach for commercial property.
Where does the Rode Report get its data?
Cap rates and vacancy rates are described as the opinion of a panel of property professionals, while outgoings and rentals by node are reported by brokers. The number of responses per node is often small, and Rode publishes the count alongside many of its tables.
Can Rode figures be used in a valuation or a rates objection?
They can support a valuation as general market evidence, but they should be tested against property-specific evidence. For a municipal valuation objection, the evidence must also relate to the roll’s date of valuation, so a current survey is rarely enough on its own.
About Campbell Property Consulting
Campbell Property Consulting is a South African property valuation and rates consultancy acting for listed property funds, property companies and private owners nationally. We provide commercial property valuations for purchases and sales, financial reporting, insurance, deceased estates and municipal valuation purposes, including municipal valuation objections and Valuation Appeal Board appeals.
Sources
All figures are taken from Rode Report 2025:3, 2025:4, 2026:1 and 2026:2, published by Rode Publications (Pty) Ltd (rodemedia.co.za), principally Chapter 1 (State of the property market), Chapter 2 (Capitalisation rates), Chapter 5 (Office rentals, Tables 5.7 and 5.8), Chapter 6 (Office demand and vacancies), Chapter 7 (Industrial rentals and vacancies), Chapter 9 (Apartment market) and Chapter 10 (SAMRRA apartments).
The interpretation, commentary and questions in this article are those of Campbell Property Consulting and are not those of Rode Publications. This article is general information only and is not investment, valuation or legal advice.