Office vacancies in Durban are down, and the city can thank its neighbour.
Durban’s office market recorded a notable drop in its vacancy rate in the third quarter of this year, and owes this improvement largely to the success of the Umhlanga node.
According to JLL’s Q3 market reports, the Durban CBD also made a positive contribution, showing confidence is gradually returning to the city’s commercial sector.
The vacancy rate for Durban’s office market declined to 11.7% from 12.3% in the previous quarter, the report says, highlighting that the major contributing node to this vacancy rate decline was Umhlanga, which saw an estimated net absorption of 4900m² of office space. This was followed by Westville at 2400m².
Because Umhlanga’s New Town Centre is a mixed-use development, Chas Everitt International’s commercial manager Denis Davidson says it appeals to various businesses, including retail stores, motor dealerships, corporations, call centres, hotels, and banks. This wide appeal is behind its success.
The precinct’s position close to The Crescent shopping centre, Gateway and N2 freeway has also contributed to its success by providing convenience and connectivity to Umhlanga’s workforce, he says.
“A number of small businesses is relocating here primarily due to relatively affordable
rents for smaller spaces. For example, you can secure a 60m² office space here for R120/m² and an 80m² retail space for R140/m²,”
While demand in these decentralised nodes has become the trend in Durban, the JLL report says it was “surprising” to see Durban CBD also making a positive contribution to vacancy rates in Q3 2017. The node’s vacancy rate declined to 16.8% in the quarter from 17.7% in Q2 2017.
Rental rates across Durban also improved slightly, with the average picking up to a gross rate of R123/m².
This is a 13% increase from Q3 2016, well above the prevailing inflation rate, the report states. “Again, it is interesting to note the steeper upward trend in the Durban CBD rental rate compare to other nodes. Although it remains at the bottom of the hierarchy, Durban CBD is clearly getting renewed attention from occupiers, partly driven by ongoing
renovations and upgrades in the inner-city.”
The report says Durban’s vacancy rate
decline and rise in rents is encouraging for developers, pointing to a landlord market developing.
As seen in Cape
Town in comparison to Joburg in recent times, the gradual introduction of new accommodation in the city contributes significantly to avoiding an oversupply.
“So far, we’ve seen Cape Town get it right, while Joburg has not managed to achieve the right balance. At just over 123 000m², Durban will have almost doubled its office supply in just two years. It remains to be seen if demand will be able to absorb all this new office space.”
Durban office vacancy rates:
Durban CBD 16.8%
Umhlanga/La Lucia 3.4%