Re-grading process in some Cape Town nodes affect office vacancy market for Q1

Posted On Monday, 14 April 2014 09:02 Published by
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Re-grading affects some nodes in Cape Town office vacancy market for Q1

The Towers Cape Town

According to Dave Russell, a director of Baker Street Properties, while the Q1 2014 figures for the SAPOA Office Vacancy Survey appear to show little change from the previous quarter, it is important to be aware of the re-grading process that has taken place when assessing the latest office vacancy figures.

Russell comments," At the beginning of each year the properties surveyed are re-graded, which results in a number of buildings being allocated a different grading.

The effect of this exercise is best seen in the Cape Town CBD figures, where a substantial amount of space was downgraded from "A" to "B". The result has seen "A" grade vacancies reducing from 10,6% in the previous quarter to 6,7% this quarter.

The "B" grade vacancy is now 11,8% and "C" grade 31,9%, with the overall vacancy,including all grades, now 14,4%. This is slightly down from the previous quarter total of 16,2%.

However, one has to bear in mind that two new office developments with vacancies totalling nearly 40,000m² will come on stream in the next quarter and in turn may take CBD "A" grade vacancies to a new high.

"The re-grading exercise has not affected the figures in all of the office nodes surveyed. It is worth taking note of Claremont, however, as the "A" grade vacancy is now down to 1% with the overall vacancy at 10,1%.

Remarkably a year ago the overall vacancy in Claremont was 21,5%." Russell says that in the Rondebosch/Newlands node the overall vacancy is now 7,7%, which is around the average for the past year.

Pinelands remains the same at 3,2% and Century City is enjoying a relatively low 6.7%, as new buildings continue to come on stream to meet demand. Vacancies in the V & A Waterfront remain consistently low and are presently at 1,3% overall.

In the northern suburbs Bellville remain relatively constant at 9,4% in all grades with a 7,6% vacancy in "A" grade.

"The top end of the office market continues to show resilience, however the secondary market is still under pressure and as a result office rentals will show limited, if any, growth in the short term," concludes Russell.

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