PROPERTY: JHI To Manage The Equinox
Recent Western Cape Business News
The Western Cape region of JHI property services group has begun the new year on a positive note by being awarded the management contract for the landmark, AAA grade building, The Equinox in Cape Town’s Sea Point area. This prestigious 5300sqm building, owned by Integr8 Group, the Berman Brothers Group and Gordon Miller Construction, comprises mainly office space with a retail component at street level and blue chip tenants which include Top Billing/Expresso and Integr8.
Comments Marius Basson, JHI regional director in the Western Cape: “This follows a year (2010) in which JHI in this region renewed leases comprising some 75 000sqm with a total contract value of R215 million, for tenants who include the City of Cape Town (4 300sqm) - in Wale Street Chambers in Cape Town’s central city, Nampak Products (7 000sqm) in Epping and Goodyear SA (20 000sqm) in Uitenhage. During the same period we let 41 000sqm of vacant space with a total contract value of R130 million to new tenants including major companies such as Fuel Logistics in Tygerberg Business Park (12 900sqm), Fruit & Veg City in N1 Value Centre (1 950sqm) and Electrolux (795sqm)in Golf Park, Mowbray.
“There is an air of increased optimism in the market which we are hopeful will convert into a higher level of activity. Pressure on consumers has eased somewhat due to the effect of the stronger rand on prices of durable goods and lower interest rates and amid the first signs that job losses have abated – all of which have had a positive impact on consumer spend. As a result we are currently seeing growing interest in retail space, at present mainly in the lower income areas such as the Cape Flats,” says Basson.
In the retail sector, and during the economic downturn JHI concluded new leases in several prime locations, including ‘The Stockade’, a new development in Ravenscraig Road, Greenpoint, where retail space with air conditioning, generator, good finishes and secure parking was snapped up at R75 per square metre. In upmarket Mandela Rhodes Place in Cape Town’s central city Pam Golding Sectional Title Administrators relocated to new premises leased through JHI, while Prominent Paints took up high visibility accommodation in bustling Main Road in Sea Point.
“In general the commercial property market is in a realignment phase, with businesses looking at their growth strategies, space requirements, location and profitability analysis. Due to the fact that vacancies are relatively high compared to the period pre-recession, it has created the opportunity for tenants to shop around and consider various alternatives. We have noted an increase in enquiries for industrial space, however, some businesses remain cautious in regard to committing to new leases,” says Basson.
In the Cape Town CBD vacant office space is available across the board, although comprising predominantly B grade space, and landlords are utilising innovative means in order to incentivise the take-up of accommodation.
Says Basson: “There is an estimated 70 000sqm of office space currently available, with rentals having reduced and all reasonable offers considered by landlords. Since late last year (2010) enquiries for such space have improved and we are hoping the market has bottomed out. There are however still many new projects on ice and in some instances developers have acquired city blocks, consolidated erven and now await the large tenants being signed up as these projects cannot commence until at least 50 percent of the leases are secured. Once a project does obtain the go-ahead, the lead time to completion is at least two years for a large building, so the current vacancies will suffice even if growth ie increased demand occurs in the short term. Certainly A grade properties will form the bulk of new developments and will compete with the likes of Century City, the V&A Waterfront, Claremont and Northern Suburbs for potential tenants. At present prime located office space in the central city is available at rentals of R85-R100 per square metre, with prime locations in the Northern Suburbs, including Bellville, available at R75-R80 per square metre.
“On a positive note there are currently many potential investors in the broad price range from R2-R500 million, seeking suitable properties with good returns of 9.5-10 percent net after expenses and with high calibre tenants in place. However, such properties are being retained by owners, unless they are under financial pressure.”
Commenting further regarding the industrial sector of the market Basson says an area which is showing emerging potential is Epping, due to its ideally central position to all major routes, close proximity to Cape Town city centre and competitive rentals. Here stock available to rent includes a property with good exposure and comprising 6000sqm of manufacturing space plus 2500sqm of office accommodation on a 2.3ha site, with a good power supply, at the rental rate of R25 per square metre. In the Blaauwberg area industrial space is available to let between R30 and R35 per square metre.
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