DESPITE a decline in commercial office space in the country, the City of Cape Town has the lowest office vacancy rate of 7.2 percent.
This is according to the South African Property Owners (Sapoa) latest quarterly review.
Anton Kotzee, chief executive of Lew Geffen Sotheby’s International Commercial Services in the Western Cape, said the influx of highly skilled employees from Gauteng, is primarily pushing demand for commercial space in both Century City and Cape Town’s northern suburbs.
“House prices in the northern suburbs are still a little more affordable than most other areas of the city, so a lot of companies are opening their doors there as well. Many of the province’s new residents are also opting to live just out of the city in towns like Paarl and Stellenbosch, so the northern suburbs are becoming a far more dynamic,central commercial node.”
Kotzee said according to the most recent Rode Report on commercial property, in the fourth quarter of last year, Tyger Valley showed the highest growth of all decentralised commercial areas in the country at 12.6 percent, followed by Century City and Sandton at 12.2 percent.
He said A-grade commercial space across the city is performing well in general.
“There is slower demand for anything other than A-grade office space, so newer buildings are performing particularly well and we’re seeing numerous developers buying up older properties to convert or tear down and rebuild. The conversion of vacant office space to high class residential apartments in the CBD, has also contributed to Cape Town currently having the lowest office vacancy factor in the country at 7.2 percent.”
Kotzee added that he doesn’t see this trend slowing down as long as the Western Cape continues to see an influx of economically active residents.
“A-grade office rentals in the CBD might however come under pressure in the future, should there be over development in this sector.”
Annenberg property broker, Lyall Johnson said it is interesting times in the economic environment.
“We have been very busy with redevelopment of old sites. The availability of premium business sites such as the Portside building have taken up space quite rapidly in the CBD. The outlook is quite positive at the moment”
Guy Friedberg, commercial consultant, Seeff Atlantic Seaboard and City Bowl, said the CBD and surrounds as far as Green Point, Sea Point and Woodstock has seen a notable rise in popularity for commercial and retail space in recent years.
“Although we have noted a slow-down in the demand this year, most notable, has been a drop in the demand for office space. We have also seen a drop in the demand from foreign tenants for retail and commercial space in the city.”
Friedberg said retail space remains attractive, provided it is in the popular nodes such as Bree and Kloof Streets in the CBD, the Green Point strip along Somerset Road and Regent Street in Sea Point. There is however, limited supply of properties in these areas, he said.
“What we are seeing though is a shortage of large retail / showroom space for car dealerships along with show rooms sized between 200-600sqm. Another recent trend, is a rise in demand for especially retail space from Johannesburg-based businesses looking to relocate to the city. While the prevailing economic and political climate is having an effect on the overall demand for business / retail / commercial space, activity nonetheless continues.”
Helga Clemo, Seeff Century City licensee, said the Century City area has become a bustling commercial and retail hub in close proximity to the CBD.
“The good road access and general quality of the area in terms of roads, greenery and architecture has contributed to the excellent demand for space in the area. According to recent media reports the South African Property Owners Association reported that Century City recorded the a decrease in vacancy, from 12.2 percent in the third quarter of 2015 to 7.1 percent in the fourth quarter, notably lower that the national commercial property vacancy rate of 10.5 percent at the end of last year.”
Meanwhile, the Airport Shopping Centre in Belhar, was recently sold through a private treaty negotiation facilitated by Nexus Property Group. The shopping centre, a non-core asset disposed of by a private fund, was bought last month by a private retail property developer. The Airport Shopping Centre features a strong tenant mix including anchor tenant Shoprite, PEP, Debonairs Pizza, OK Furniture and KFC, and was 77 percent occupied at the time of the sale.
According to Elias Tzouvanni, co-director of Nexus Property Group, shopping centres of this value and uptapped potential are rarely available to buy in the Western Cape, and the disposal thereof created a unique opportunity for a local investor to take advantage of.