Buyers and tenants market

Posted On Monday, 28 May 2001 03:01 Published by
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For thirty years tenants had such a market for offices. Despite the optimism from SAPOA the rental market is still decidedly in the tenant's favour

NOT FOR thirty years have tenants had such a market for offices. Despite the optimism from SAPOA the rental market is still decidedly in the tenant's favour.
Almost all buildings have some sort of vacancy factor, and in some older CBD and main street blocks tenants can still largely write their own ticket. Although SAPOA's institutional members suggest that typically only one or two months of free rent is normal, less tied agents say the rent holiday and installation incentives possible can make a move very attractive.
Tenants can even expect to do a better deal on re-signs.
The typical 12% annual increment clauses have been crumbling for a while so that current rents paid by existing lessees are normally in excess of the new letting rate. That fact probably won't be pointed out by the landlord or agent but a simple phone call should establish what new tenants are being offered, and smarter owners will still be anxious to re-sign an existing tenant at a lower rental and on better conditions.
Such a market situation in Cape Town hasn't existed since the early 1970's when office rents hovered around R3sq m for several years - before doubling and trebling by the end of the decade.
Despite the doom say-ers the same situation is likely to apply this decade so that the present rates may begin accelerating again.
The opportunity for sectional title office buyers may be even better. Current new developments of office space from Kenilworth to Blaauwberg to Tokai have an asking price of R6 000sq m.
Some half empty older style but well located office blocks may soon opt for selling off on sectional title - probably at half the price of new offerings.
Whereas the funding of new office buys has barely marginal advantage over renting the same quality space, funding of older space leaves a healthy margin for refits and still comes out cheaper.
Buying also tends to peg the annual increment expense rate closer a falling inflation rate.
Whatever the plan soon may be a good time to be shopping around on office space.

Publisher: Cape Business News
Source: Cape Business News

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