Slow econ­omy lim­its de­mand for of­fice space

Weekend Argus (Saturday Edition) - - PROPERTY -

THE SUB­DUED eco­nomic cli­mate con­tin­ues to af­fect the of­fice leas­ing mar­ket, with lim­ited de­mand for new of­fices in the third quar­ter of the year, ac­cord­ing to Dave Rus­sell, a di­rec­tor of Baker Street Prop­er­ties.

He said most nodes were not show­ing im­prove­ments in va­can­cies and new busi­ness growth that should trans­late to de­mand for of­fices was still lim­ited.

“The third quar­ter Sapoa (South African Prop­erty Own­ers As­so­ci­a­tion) of­fice va­cancy sur­vey con­firms that Cape Town’s CBD sec­ondary build­ings in par­tic­u­lar are con­tribut­ing to ris­ing va­can­cies, with B grade reach­ing 13.7 per­cent and C grade 26.9 per­cent. The over­all va­cancy for all grades in the CBD is now 14.7 per­cent.

The new stock sched­uled to come on stream in the next few months would fur­ther add to escalating va­can­cies.

“In the south­ern sub­urbs va­can­cies were re­duced, with Clare­mont mov­ing from 21.5 per­cent to 11.3 per­cent as a re­sult of a large take up of of­fice space by a call cen­tre.

“In the Ron­de­bosch/New­lands node there was a slight re­duc­tion to 5.3 per­cent from 5.9 per­cent in the pre­vi­ous quar­ter and in the north­ern sub­urbs node of Bel­lville, va­can­cies in­creased from 8 per­cent to 9.6 per­cent.

“As new de­vel­op­ments were com­pleted in Cen­tury City and the V&A Water­front, there has been a mar­ginal in­crease in va­can­cies in each of th­ese nodes to 5.9 per­cent and 3.7 per­cent.”

He said dur­ing the past quar­ter the 18 000m² Al­lan Gray build­ing had been com­pleted in the V&A Water­front, and Bow­man Gil­fil­lan oc­cu­pied 10 000m² of new of­fice space at 22 Bree Street in the Cape Town CBD. In Cen­tury City, the 5 800m² Park Lane precinct had reached com­ple­tion and a fur­ther 7 000m² would be com­pleted by the last quar­ter of the year, when the Busi­ness Cen­tre and No 3 Bridge­ways come on stream.

Over­all Cape Town va­can­cies this quar­ter in­creased to 10.4 per­cent from 9.8 per­cent in the sec­ond quar­ter.

The bulk of th­ese va­can­cies were in the sec­ondary of­fice mar­ket, where some space had been va­cant for long pe­ri­ods and showed lit­tle chance of be­ing leased, as some land­lords con­tin­ued to pitch their rentals above mar­ket ex­pec­ta­tions.

Rus­sell said: “The econ­omy re­mains sub­dued with a min­i­mum of new jobs be­ing cre­ated. This is ex­pected to keep of­fice de­mand low, driven mainly by cor­po­rate con­sol­i­da­tions and a mar­ginal take up of qual­ity of­fice space. This will leave sec­ondary build­ings with large va­can­cies, par­tic­u­larly in the CBD.”

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