Cape Town CBD office vacancies filling up
Even for the untrained eye, Cape Town CBD’s skyline is impressive. Building cranes, trucks, artisans – all superficially at least signs that the city’s economy is robust and healthy. Off the beaten track, buildings that have been boarded up go unnoticed.
The high vacancy rates in some of the Cape Town CBD older office blocks have been a worrying trend over the past few years. This trend has been particularly visible in the lower grade office blocks.
Over recent months we have seen an encouraging drop in vacancy rates in these buildings. This fall was despite a number of new speculative developments adding high-end office space to the pool of available office space for rental.
These improvement vacancy rates is partly driven by a lower economic growth, that has made lower priced office space more attractive. Higher rentals for prime office space have also played a role in making cheaper offices buildings more attractive.
What has been particularly interesting is that despite the fact that the South African economy has generally been performing rather poorly, we have still seen a general improvement in rental rates for A-grade office space.
According to the latest Rode’s Report on the SA Property Market, office rentals for A-grade offices in Cape Town’s CBD saw a year on year growth of 9,5% at the end of 2013, compared to a 8,6% growth in the Johannesburg CBD. Office rentals in Claremont, Tygervalley and Century City saw a similar improvement.
We have seen a definite trend towards premium office space in prime locations. This demand is driven by three factors: safety, environmentally friendly working space, and a need for office space that is equipped for the demands of a digital office environment.