September 25, 2004

By Graham Norris

Property Editor - Strong renewed interest in office space at Century City has seen the overall vacancy factor falling to a two-year low and a flurry of new commercial and business developments set to come out of the ground.

Century City office vacancies have been steadily dropping for eight consecutive quarters and are now standing at 8.75% against a high of 19.5% at the start of 2003.

The past quarter alone has seen a 1.7% improvement in vacancies in spite of some new office buildings having come on stream.

According to the latest Sapoa (SA Property Owners' Association) Office Vacancy Survey published in June, Century City is comparing highly favourably with other office nodes.

In June, Century City's vacancies were at 10.4% against 11.7% in the Cape Town CBD, 10.9% in Bellville, 22.1% in Claremont and 11.2% in Rondebosch/Newlands.

The only better performing node was Pinelands, where vacancies stood at 4.1%.

Recent lettings at Century City include three in Waterford House for a total of 1 674m2 - 690m2 to Kuoni Private Safaris, 660m2 to Lexis Nexis/
I-Digital and 324m2 to Concorde Travel, trading as Carlson Wagonlit Travel.

Century Square, the R90 million sectional title development by Harries Projects, has also seen some significant lettings and its overall vacancy factor now stands at 750m2, or 7.7 % of the gross lettable area of 9 724m2.

Rentals have risen on the back of improved demand and gross rentals now vary from a low of R65 to a high of more than R100 per m2, with tenants prepared to pay higher rentals for new premier buildings with the location and lifestyle of Century City.

Greg Deans, managing director of Century City Property Developments, said it was no coincidence that renewed demand for offices was coming on the back of the surging residential market at Century City.

"The city-within-a-city concept where one can literally shop, work, live and play is now truly coming into its own at Century City. All the various elements of the city - the residential, retail, offices and leisure components, complement and feed off each other to create an integrated lifestyle where almost every conceivable amenity is right on your doorstep," said Deans.

"We are already seeing home purchasers looking to relocate their offices here and vice versa and this is a trend we expect will gain further momentum as we go forward," he said.

New buildings that have come on stream at Century City in the past year include new head offices for Cecil Kilpen and Maas & Coetzee Architects, with two other office blocks for owner occupiers currently under construction.

Other major commercial projects including a 40 000m2 business park, new head offices for an IT software company and a new motor lifestyle centre for a major European car manufacturer are also in the offing.

Work on the first of these is expected to get under way later this year.

To meet increasing demand for quality offices at Century City, a low-rise office development comprising four stand-alone, freehold office blocks was recently launched by Century City Property Developments with the first two buildings being snapped up by purchasers within weeks and strong interest being shown in the remaining units.

A joint venture with TGLC Developments, this R20m development offers superb investment opportunities for owner-occupiers or other investors looking for steady annuity income coupled with compounded capital growth prospects.

Deans said the project was a response to growing demand from investors and small to medium-sized businesses for stand-alone, freehold title offices in a secure environment and followed the success of the neighbouring Waterford Mews development.

"It is widely accepted that the commercial market has seen its worst in the current cycle and demand for office space has picked up sharply over the past six months. With this trend expected to continue, achievable rentals are anticipated to firm strongly over the next 12 months."