Pretoria CBD declining, says property broker

Tshwane, and more specifically the Pretoria CBD, is the capital of South Africa, home to the seat of central government administration, and therefore a place of high importance in a national and international context.

Yet, says Jan Oelofse, leasing and sales broker for JHI Properties, despite the efforts of dedicated officials who have visions of creating a worldclass capital city, the strengths and potential of the CBD are not being capitalised on and this strategic location faces the threat of urban decay.

An aerial view across Pretoria CBD, looking west, with Church Street on the left.

"Of concern is how long the city's ageing buildings will still meet the requirements of government," he says.

"Can this be regarded as a world-class city and how does it compare with emerging cities in other African countries, such as Nigeria?

"The only new developments of note that have taken place in the CBD over the past 20 years are the new National Library building and the basic education department building - and the revamp of the central government offices in Church Street was recently completed.

"The old Home Affairs and South African Agricultural Union buildings and central government offices on the corner of Church and Bosman streets have been significantly upgraded, and cosmetic upgrades of lesser buildings have been undertaken before leases were entered into for office accommodation for government departments."

Oelofse says in 1987 the west wing of Munitoria, the Tshwane council building, was destroyed, eradicating 50 percent of the council's operating space, and since then a number of redevelopment proposals for the new Tshwane metropolitan headquarters had been announced but not implemented. In April, it was announced that development of the new head office would begin before the end of the year, but so far this has not happened.

"The absence of new developments has resulted in the stagnation of this very important national landmark, with a gradual migration away from the precinct resulting in vacant buildings with little demand for the space," sats Oelofse.

"In an effort to prevent buildings from going to ruin and to protect their investments, landlords have converted a number of office buildings into residential units, to cater for the demand for such accommodation. Although this has reduced the over-supply of office space to some extent, it has not created any new developments.

"On a positive note, the demand for retail space is relatively strong in contrast to the weak and deteriorating office vacancy situation. However, buildings cannot rely on their retail components alone to make them viable, so spending on maintenance of buildings is kept to a minimum and the deterioration of the buildings continues."

Oelofse says the demand for office space comes mainly from the government as the private sector has to a large extent moved to decentralised nodes. Due to lack of development and space in the CBD, government departments are following suit, resulting in a fragmentation of departments.

An office vacancy survey conducted by the South African property Owners' Association in the third quarter of last year in the CBD revealed that of total A, B and C grade office space of 532 604m2 , 5.1 percent was vacant. However, a recent office survey by Oelofse of 34 major buildings, comprising mainly B and C grade space, tells a different story. The total vacant space in these buildings amounts to 110 794m2, which is 20.8 percent of the total.

"Significant amounts of money will need to be spent on these B and C grade buildings to bring them into an acceptable state for letting," says Oelofse.

"Of note is that what is considered B grade space in the CBD is materially different from B grade buildings in the decentralised nodes, where the quality and economic use of space is of a higher standard, due to the age difference of the buildings.

He says in stark contrast to the stagnation in growth in the CBD, office space in the major decentralised nodes increased by about 185 000m 2 over the past five years, without taking into account the proposed new developments in Menlyn and its surrounds.

"One has to ask why is there a reluctance to redevelop the buildings in the CBD to create a world-class city and a capital city worthy of South Africa and a leader in Africa," he says.

"Tax concessions have been approved for developments in the CBD. Tshwane town planning officials published an excellent document, The Inner City Development Strategy, as a development guideline for the CBD, which was adopted for implementation by the council around 2005.

"All the planning has been done, as the Department of Public Works undertook various strategic studies in 2000 to determine the availability of office space and project government space requirements over a 20-year period.

"The Re Kgabisa initiative was launched in 2005, and it involves the improvement of more than 40 government departments and agencies' premises, representing in excess of 1.2 million square metres of space. And although a substantial amount of work has already been undertaken, implementation is expected to take another 10-14 years to complete. The upgraded properties mentioned above are part of this initiative, however the efficiency of the old buildings is to be questioned.

"A useful exercise would be to determine the actual cost of the current fragmentation of the municipal functions located in various buildings across Pretoria and that of several major government departments suffering the same conditions, versus the cost of co-ordinated development to house consolidated government departments.

"Rentals are the most obvious costs, however there are other costs related to fragmented departments for duplication of services, functions, rental charges, security and inefficiencies in systems, as opposed to new, well-planned accommodation providing efficient, modern working conditions.

"Old buildings are simply becoming older and more inefficient, just postponing the inevitable move, whereas new buildings will extend the usefulness and efficiencies for a further 20-40 years."

Weekend Argus (Sunday Edition)

Posted at 08:40AM Nov 21, 2011 by Editor in Commercial  |  Comments[1]