PROPERTY: Sideways Move For Industrial, Offices
Recent Western Cape Business News
THE first SAPOA Office vacancy survey of 2011 shows little change to vacancy levels in most of the Cape Town nodes surveyed, according to Dave Russell, a director of Baker Street Properties.
“In fact, if one compares the vacancy levels with those recorded a year ago it would appear that vacancy levels may be reaching their peak. Year on year figures have seen a slight increase in vacancies in three of the seven nodes surveyed with vacancies in three nodes decreasing and one node remaining the same.”
“The total office vacancy in the Cape Town CBD is now at 9.8% where a year ago it was 9.1%. In the Rondebosch/Newlands node there has been an increase from 4.8% to 5.9% in the past year, along with the V & A Waterfront where there was a small increase from 2.9% to 3.7%.”
Russell says areas which have enjoyed a decrease in vacancies over the past year are Claremont, where it has reduced from 16.6% to 12.7%, Pinelands down from 5.2% to 4.8%, and Century City where a vacancy of 11.7% last year is now down to 10.2%. In Bellville the vacancies remained the same as a year ago at 6.2%.
“New developments coming on stream are often the main contributing factor to increasing vacancies. However, with no significant speculative office developments taking place, a major change to these figures is not anticipated,” Russell says.
“While this is good news for landlords there is no doubt that it is still a tenant’s market. Attractive lease terms can still be negotiated for offices in most locations where tenants can find the right premises to meet their requirements.”
“Baker Street Properties have experienced a steady flow of enquiries from office tenants who want to take advantage of current market conditions.”
“We are in a position to find the right property solution, or if necessary, renegotiate their existing lease should they wish to remain in their premises. In both instances the tenant receives the best advice enabling them to take advantage of the concessions available in the market today,” says Russell.
On the industrial side the market still generally favours tenants, but there is a looming shortage of large good quality high-volume warehousing with only a handful of buildings still available, according to Baker Street’s Andy Beddow.
“Our records reflect that approximately 445 000 sq m of industrial property available in the greater Cape Town area is vacant - two thirds of which are buildings over the 1 000sq m size mark.
“In the last eight months 80 000 sq m of industrial space has been taken up, predominantly in the sector of buildings over 1 000 sq m. In Epping alone there has been 40 000 sq m taken up. We are seeing more and more redevelopment in Epping due to its central location, not only for logistics reasons, but also because of easy access for staff,” Beddow says.
Power availability across the metropole also remains scarce. He says that users looking for large power supplies have a very limited choice in terms of property alternatives.
Significantly, rentals have not changed in the last 12 months and are not expected to increase during the balance of the year. The average gross rental across the board is still R30.00/sq m, with good quality warehousing reaching R48.00/sq m.
“Industrial land still averages around R1 000/sq m, but we are not seeing much new development. Even with lower interest rates, access to development finance is scarce.”
“In summary, although there is a fair amount of industrial property vacancy in greater Cape Town, we expect this to be slowly eroded due to very little new development in the pipeline,” concludes Beddow.
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