An availability of space, with office vacancy levels in Joburg around the 10% mark in most areas – ranging from an extreme low of 1.2% in Milpark to a high 18.9% in Rivonia, according to the SAPOA Office Vacancy Survey Q4 2009 – provides new tenants the opportunity to negotiate space for immediate occupancy.

Teagle notes that while landlords may not be prepared to soften on their asking rentals for potential clients, especially for those seeking smaller offices, less than 1,000sqm, property owners will willingly employ other tools in their leasing arsenal to sweeten deals, such as offering generous fit-out allowances. Tenants of 2,000sqm or larger are in a strong position to negotiate keen rental deals. 

There are also great opportunities for the subletting of spaces. “With some large companies down-sizing they are finding themselves with unutilised floor space in their building and are seeking sublet tenants to occupy this area,” says Teagle.

Notwithstanding good levels of leasing activity, Teagle notes that commercial property sales have all but ceased in the current market.
“There are serious buyers in the market, but a disparity in viable pricing with sellers is proving a stumbling block to successful sales being concluded,” says Teagle.

“Asking prices are too high for purchasers’ appetites and, despite some tough economic challenges, distressed selling and fire-sale prices remain an unfulfilled hope for opportunistic buyers.”

Teagle believes that there will have to be a shift in market fundamentals before this will change. In the meantime, sellers are willing to wait the market out to get the right price, knowing that it is worthwhile hanging on in the cyclical property market.

“In many cases the selling price will need to cover the cost of building at the most expensive point in the cycle,” points out Teagle, who envisages that it may be some time before commercial property transactions increase.