The address they want on the letterhead
On Location | Having grown from farmland to Africa’s richest real estate in just 40 years, Sandton CBD’s biggest challenge is keeping up with its own success, says Adele Shevel
ONLY four decades ago, Sandton was undeveloped farming country with horses roaming — but what a difference a big shopping centre, a convention centre, glitzy hotels and the stock exchange can make.
Sandton Central is considered the richest square mile in Africa — and that was before its latest growth spurt. The financial and commercial hub of South Africa bristles with cranes, demolitions and new buildings.
Sandton is now set to overtake downtown Johannesburg in terms of commercial office space. The completion of the current pipeline will increase Sandton office supply to 1.7 million square metres, giving it the biggest stock of office space in the country.
Since 2012, more than 115 000m² of new developments have been added, according to global real estate company Jones Lang LaSalle. The current development pipeline is 185 000m², of which more than 70 000m² is due for completion this year.
There are concerns about the capacity to cope with additional traffic to the node. Between 8 000 and 10 000 more cars are forecast to enter the area once all developments are complete.
In the past year, vacancies in Sandton have shot up.
“Rents are stagnating, achieving limited to no growth in some cases,” said Ndibu Motaung, head of research at Jones Lang LaSalle South Africa.
“This is because occupiers are now presented with a wider choice of quality buildings and other competing nodes have cheaper rental and less traffic. But there are occupiers who insist on taking occupation in Sandton due to prestige, proximity to clients, and great infrastructure and amenities.”
The development pipeline is driven mainly by companies such as Sasol head office (67 000m²), Webber Wentzel (34 000m²) and Ernst & Young (33 000m²).
Discovery is building the largest single commercial office development in Africa at 87 000m² — and 5 100 parking bays. It plans to move into the building in 2018.
“This is where all your financial people are and believe this is where they need to be,” said Marc Wainer, executive chairman of Redefine Properties. “People want to be there for the prestige.”
But, he said, there was already growing resistance to the area’s traffic congestion.
“The problem is if you go back 30 years or so, Sandton was full of smallholdings and the infrastructure was never designed to cope with what’s going on.
“If you talk to local authorities about making one-way streets, they’re not interested.”
Traffic lights are often out of order and just getting out of an office block can take ages.
It is not as if having more space available means it is any less expensive.
Sandton’s mean A-grade office space in the first quarter of this year was R150.83/m² compared with Rosebank at R127.50, Bryanston at R119.75 and Cape Town’s CBD at R105, according to Rode & Associates.