The country’s prime office locations are linked in a golden triangle, and two are set for more development
A golden triangle links South Africa’s prime office locations running from Umhlanga/La Lucia in KwaZulu-Natal across to the Sandton CBD in Gauteng and down to Century City in the Western Cape.
While each precinct offers quality P and A-grade space for high-end occupiers and investors, there is no doubt that economic realities, and over-supply, are driving landlords to further green innovation, rental incentives and new ways of thinking about the use of space.
The latest Office Market reports released by Broll Property Group bring these three locations into sharp focus.
Sandton is in the heart of Gauteng, the acknowledged powerhouse of the South African economy, and continues to reflect positive, albeit slower, demand for prime office space.
Nevertheless, it is becoming increasingly hard for those seeking premium-grade space for their businesses to ignore the advantages offered in both the Century City and Umhlanga/La Lucia nodes, Broll says in its reports.
Century City has marketed its live-work-play ethos over two decades. Its comprehensive perimeter security fencing, eco-friendly landscape, smooth integration into the Cape Town transport system and wide range of amenities have secured the attention of large corporate tenants in professional services, consulting, engineering, IT, marketing, financial services, advertising and media.
According to Broll’s Century City Office Market report, vacancies are currently at 8%. By contrast Umhlanga/La Lucia has an average vacancy rate of 5%, and Sandton has 16%.
The Umhlanga/La Lucia node presents a contrasting environment to both Century City and Sandton, with its sea views an immediate differentiator.
There is enormous development in Umhlanga Ridgeside and New Town Centre, and in neighbouring Cornubia and the Sibaya Precinct to the north, all of which open fresh opportunities for tenants and landlords.
New office space coming on to the market is regarded as a good indicator of a node’s growth. With a vast number of developments having recently come on to the market and many new office developments scheduled to be launched within Umhlanga/La Lucia in the next 12 to 24 months, growth is definitely evident.
P-grade gross achieved rentals in all three regions present as follows:
- Century City: R175-R195/m²/month
- Sandton CBD: R220-R250/m²/month
- Umhlanga/La Lucia: R170-R200/m²/month
The nodes all house common amenities which include hotels, conference centres, upmarket retail offerings and high-end restaurants. Security is paramount.
From an investor perspective, there’s growth in all three nodes, but growth in Century City and Umhlanga/La Lucia is tipping the scales, notes the Broll reports.
An oversupply of office space in Sandton together with the emerging trend of clients seeking smaller office units has constrained this market .
Sandton landlords are having to be flexible in their offerings and innovative in their thinking as they look at new ways of marketing vacant space.
However, the demand for prime-grade Green Star office accommodation is still more pronounced in the Sandton CBD, hinting at continued interest in the area from high-end investors and occupiers.
From Broll’s reports it is clearly evident that South Africa’s “golden triangle” offers world-class office space and amenities.
While Sandton has long topped the bill as a prime office destination, Century City and Umhlanga /La Lucia are riding high. This is evident in the high quality of new office space and associated amenities coming on line in these competing regions.
However, Sandton’s oversupply and the resulting pressure on rents have sparked an innovation trend, says Broll, with the addition of quality mixed-use projects.