Until such time as new office developments come on stream, the Cape Town office market will be like a “pressure cooker” as demand outstrips supply.
“The latest SAPOA Office Vacancy Schedule confirms that office vacancies throughout the country have plummeted and Cape Town vacancies are among the lowest,” says Dave Russell, director of Baker Street Properties.
“Quality office space is now at a premium with ‘A’ grade vacancies in nodes such as Claremont now 1,2% and Rondebosch/Newlands 1%. Things are not much better in the northern suburbs with Bellville ‘A’ grade vacancies now down to 2,2%. At these levels tenants are finding it increasingly difficult to accommodate growth and companies wanting to move into these nodes have very few, if any, options to consider.
“Century City is presently enjoying significant building activity where around 28,000sq m is coming out of the ground. Vacancies in existing ‘A’ grade buildings has dropped from 7,8% to 4,8% in the past month, however, this will change as new buildings come on stream.”
Demand for quality offices in the Cape Town CBD has taken ‘A’ grade vacancies down to 4,6% and there is nothing available in the V&A Waterfront. The only new office developments presently under construction to meet this demand are The Boulevard office park and The District on the periphery of the CBD. The refurbishment of the OK Bazaars building at 11 Adderley Street will be completed later this year.
According to Russell these figures compare favourably with the rest of the country where, for example, ‘A’ grade vacancies are 1,9% in Braamfontein, 2,3% in Sandton and 2,1% in Randburg. In Durban the vacancies are down to 3,2% in the CBD and 1% in Umhlanga/La Lucia. In Pretoria vacancies are 0,7% in the CBD, 0,1% in Arcadia and 0,6% in Centurion for ‘A’ grade space.
“As a result of these decreasing vacancies we have seen a surge in office rentals as landlords capitalise on the demand for quality office space. Top-end rentals in Cape Town have sailed through the R100/sq m mark with R120/sq m to R150/sq m being achieved in the nodes surveyed. It is anticipated that rentals will continue to increase until such time as new developments are completed to satisfy the demand,” says Russell.
Source – Property 24