Cape Town is catching up with decentralisation trend
CAPE Town's city centre has lost a significant number of big office tenants to the suburbs in the past four months, according to an SA Property Owners' Association (Sapoa) survey.
Office rental vacancies in the city centre are up 15,2%, representing 704335m² of space, against vacancies of 10% in February, Sapoa says.
Property dealers say the effect of decentralisation which hit Johannesburg's central business district hard some time ago is finally being felt in Cape Town.
The market in Johannesburg, meanwhile, appears to be stabilising, with vacancies across the board at 23,1% and A grade vacancies down to 20,1% from 23,3% four months ago.
Crime and grime, expensive parking space and the need for stylish, well-equipped offices, fresh air and new corporate identities are driving companies from Cape Town's city centre to the suburbs, property dealers say.
One of the companies that has moved its headquarters out of the city centre is consulting group PricewaterhouseCoopers, which vacated about 5000m² of office space when it left for Century City in April.
Banking group BoE is expected to move to the V&A Waterfront in October, vacating 8000m² of A grade office space in the central business district.
However, according to the Property Market Intelligence Service report prepared by Viruly Consulting, the number of office vacancies in Cape Town and surrounding areas has dropped, particularly in Claremont.
Wayne Howitz, regional manager for rental and leasing at JHI Real Estate in Cape Town, says: "Outlying areas are also expensive, but the cost of parking is less and the offices meet the requirements of their tenants."
Christopher Phosa, JHI's Johannesburg leasing administration officer, says installing new infrastructure for technology in existing offices is very expensive. Landlords are not prepared to get into that sort of project when they are not sure that tenants will want to take the space.
Just as Johannesburg lost many big tenants to plush offices north of the city, Cape Town's migration is mostly to the new office parks in Newlands, Claremont and Pinelands, where rents range between R52/m² and R90/m².
While one property dealer reckoned Sapoa's vacancy figures might be "a bit conservative", David Russell of property company Lyons Baker Street points out that some of the new office parks, especially in Claremont, have a vacancy rate of about 16%, which is higher than the city centre's 15,2%.
"The city centre is going through a rejuvenation process," says Russell, whose company conducted the office vacancy survey on behalf of Sapoa.
"City centre offices are very competitive compared with the suburbs. Companies in decentralised areas can expect to pay 30% to 50% more than their counterparts in the city centre," he says.