Demand for Office Space
Given the price pressures and the rise in consumption costs, corporates are still lowering costs and reducing inefficiencies through consolidation. This has seen take up in prime buildings and locations such as the Waterfall Business Estate, Sandton, Bryanston and Rosebank continue their resilience.
Notable deals in the market in Q4 included:
• International media company leasing 4,500m² of office space in Sunninghill;
• Waterfall Business Estate signed prominent corporates Novartis taking 7,000m² of office space and Premier Foods for 4,000m²;
• Dutch multinational commodities trading company, signing a deal to relocate to Sandton for over 5,000m² of office space;
Completed projects this quarter include a 46,000m² development in the Waterfall Business Estate which will be occupied by Cell C; a 6,000m² development for the international engineering consulting company, Golder Associates; and 5,000m² for international pharmaceutical company, Cipla.
Office Vacancies
Office vacancies continue upward trend since the beginning of 2013 with Johannesburg reaching 11,6% and national vacancies increasing to 11,2%. These are the highest level of vacancies seen since Q4 2011 which will be further exacerbated by the additional new stock currently under construction in the market.
Industrial Market Overview: Demand
The industrial market continues to gather interest in specific areas such as the Gosforth Park, Waterfall, N1 Business Park and the north of the OR Tambo International Airport having some activity. International competition in the manufacturing sector resulted in South Africa's imports exceeding exports.
Demand in the industrial sector has been driven by logistics and distribution companies, particularly in the retail sector. Consequently, the local industrial sector has seen an increase in big box type facilities to handle and distribute these imported products.
Take up increased in Q4 2013 from 63,212m² in Q3 2013 to 95,231m² in the period under review.
Industrial Property Vacancies
Whilst take up improved this quarter, the amount of new vacancies also increased which increased overall Johannesburg Industrial vacancy rate to 5,0% in the current quarter, up from 3.6% in Q3 2013. A similar trend was witnessed in the previous year, where vacancies increased at the end of the year, possibly reflecting the a period where companies are reviewing their leases and moving premises.
