Offices in Jo'burg CBD are 25% vacant.

Posted On Wednesday, 29 January 2003 10:01 Published by eProp Commercial Property News
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Johannesburg's central business district (CBD) has looked stark, with office vacancies at about 25% of its total gross lettable area over the past two years, according to vacancy figures from commercial property industry association Sapoa.

Francois VirulyThe figures for the quarter ended December last year put city vacancies at 24,4%, down from 25,8% in the previous quarter and 25,4% nine months earlier. A vacancy rate of 24,4% for the city meant that 394351m² of CBD office space is unused.

B-grade buildings have suffered most, with vacancies of 36,2%, or 155404m². Vacancies in the A grade category accounted for 20,2% of space.

Property economist Francois Viruly says persistently high Bgrade vacancy levels could trigger another wave of urban decay.

B-grade offices have been hit by the narrowing of the gap between rent for A- and B-grade offices. Many people have swapped B-grade offices for Agrade space because the cost implications are minimal. Viruly says B-grade offices are under pressure even in decentralised areas of Johannesburg.

The Sapoa figures show Agrade office vacancy levels stabilising in the nine months ended December, but B-grade vacancies worsening in areas such as Sandton, Rosebank, Houghton, Killarney, Parktown and Rivonia.

This is a result of oversupply in decentralised areas of Johannesburg, which has pulled down Agrade building rentals.

Dijalo Properties director Saul Gumede says Johannesburg's CBD office market is stabilising, and stable vacancy rates suggest that the flight from the city to decentralised areas has ended.

He says people remaining in the city are there by choice. 'I see the rate coming down from 25% in the medium term,' he says.

Tighter margins are of little concern, he says, as the city has some advantages over decentralised nodes.

One is less traffic congestion. 'We need to ... bring people into the city to see for themselves the improvements that have taken place in the past few years,' says Gumede.

 

Last modified on Friday, 16 May 2014 10:29

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