By Barbara Hollands

With office developments popping up all over former residential areas, East London is experiencing such a glut of office space that agents are battling to rent it all out.

Commercial property agents in the city say office space to let has reached saturation point and that much of it is standing empty.

The face of the city’s CBD has changed, with many businesses having moved out in favour of the suburbs to escape parking problems, crime and pavements congested with traders and covered with litter.

“There is an oversupply of office spaces in East London and we are battling to let them,” said Krubar Properties owner Connie Miskey.

Following municipal rezoning of former residential areas in suburbs like Southernwood, Vincent, Berea and Beacon Bay a few years ago, many businesses had opted to stop paying landlords in the CBD’s high rises and bought residential homes to convert into office space.

Developers had also seen the gap and built state-of-the art office buildings.

“There are so many new buildings. A lot of them were planned before the recession and now there are ‘to let’ signs everywhere.”

Miskey said the global economic slump had put a stop to the “buying frenzy” of houses and land for use as commercial property.

“When the demand was satisfied and the economic slump hit, businesses scaled down and are now being run from Port Elizabeth or Cape Town with no office in East London.

“Also, some people have given up paying rent on offices and work from the dining room tables or garages at home. Some insurance companies, for example, which used to have big offices now just send a rep once a week. Or, where they used to employ five people, they now employ one.”

Miskey said many tenants had left the city centre because of inner city problems.

“It is filthy in town. Who wants to run a business there unless you are selling cheap imports? Also there is very little parking, as well as a criminal elements. This is why there was a move into the suburbs.”

John Batting, of Batting Properties, explained that although many professionals had joined the exodus out of the city centre, their place had been taken by black professionals who preferred to work in town in order to be close to transport routes used by their clients.

“Times changed after apartheid and more black people became professionals. Then the Buffalo City Municipality rezoned many suburban areas for development so it made sense for many to move there.”

He confirmed the office rental business had “dried up considerably” in the past four months.

“Before that we were active but now office inquiries are very poor and it’s hard to say why.”

Batting said he would not advise investors to renovate residential houses into office spaces, given that they would have to factor in the cost of renovation on top of the purchase price and transfer duties.

“It would be crazy for an investor to do that unless he is pretty wealthy and can see it as a long term thing because he will struggle to let it.”

Batting, who has been in the letting business in East London for 38 years, said although the situation was “worrying”, he was hopeful things would turn around.

Z-Prop owner Hennie van Zyl described the office rental industry in East London as “overtraded”.

“I think a lot of businesses climbed onto the bandwagon of developing offices for investment purposes and the East London market can only take x amount. I’m battling to find tenants for the developments I am letting in Berea and Beacon Bay.

“I have a new development in Pearce Street which even has a sea view and in five months I’ve only filled half of it.

“Last year was a better year for office accommodation.”

Source: The Herald