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Monday Dec 12, 2011

Office space going begging in Cape Town

The last SA Property Owners Association (Sapoa) office vacancy survey for 2011 confirms the ongoing trend of increasing vacancies in Cape Town, with six of the seven nodes included in the survey showing increases on the previous quarter's figures.

Dave Russell, a director of Baker Street Properties, says although most of the increases are marginal, they are a confirmation of a continuing trend that should be of concern to landlords.

"In the Cape Town CBD the combined vacancy rate of Premier, A- and B-grade offices is now at 10.5 percent. At the same time a year ago the vacancy rate was 9.7 percent. In the southern suburbs we now have a combined vacancy rate of 13.7 percent in Claremont and 7.3 percent in the Rondebosch/newlands node.

"In the Tygerberg suburbs the Bellville vacancy average is now 9.4 percent whereas a year ago it was around 6 percent. It is encouraging to note that Cent ury Ci t y vacancies have reduced over the past year from 10.5 percent to 8.8 percent.

"Pinelands also seems to be bucking the trend and presently has a vacancy rate of 3.4 percent, although this is one of the smaller office nodes. For the popular V&A Waterfront the figure is 6.9 percent, and the new Allan Gray office complex is under construction in the Clock Tower precinct."

Russell says there have not been many new office developments in the Cape Town CBD for some years. However, construction has started on the new Portside building, a joint initiative between Old Mutual and Firstrand Bank, which will provide 52 000m² of office space. Portside will become the provincial headquarters for Firstrand's three divisions – FNB, RMB and Wesbank – and Old Mutual will offer an additional 25 000m² of prime space for leasing to corporate and retail tenants, which will be available from early 2014.

"One of the factors influencing interest in the CBD and the city periphery is the availability of public transport," says Russell.

"The new IRT system gets staff to and from work more quickly and efficiently and has proved to be very popular. The further expansion of this service will contribute to the continued interest in the city for future development.

"Although the economic downturn has been responsible for the increasing vacancies, it has created some attractive opportunities for office tenants who are in a position to take advantage of present market conditions.

"As a property company marketing virtually all of the vacant office space in Cape Town, both leasing and sales, we have seen many companies that shelved their expansion or relocation plans several years ago now coming to the market taking advantage of the concessions offered by landlords.

"We encourage tenants to position themselves accordingly and use this opportunity to take a long-term position on favourable lease terms."

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