AS VACANCY figures continue to reduce in Cape Town, Baker Street properties is predicting a major rise in rentals for offices in coming months.

Dave Russell, a director of Baker Street Properties, says the steady reduction in vacancies has been particularly evident in the Cape Town central business district and southern suburbs, where combined Premier and A-grade vacancies have dropped to 8,9% in central business districts, and 7,7% in Claremont.

Lower interest rates, good gross domestic product growth, the absence of speculative developments, and conversions of office blocks to residential units have played a part in turning the market around, says Russell.

"After many years of enduring a tenants' market, landlords are soon going to benefit from this correction and should enjoy good rental growth in the years ahead."

Russell says that using data dating back to 1975, Baker Street predicted in

2002 that rentals would turn around next year.

"We are confident that these predictions will materialise and may soon reach levels which will support new development," Russell says.

Already, office rentals of R80/m² to R100/m² are being achieved in certain prime properties and at these levels new developments become feasible.

Baker Street says this turn in the market will affect land values as demand increases and developers take a position.

The company says industrial land has experienced significant growth in the past 18 months and now the same can be expected for commercial or office land.

Oct 27 2004 08:21:33:000AM Business Day Reporter Business Day 1st Edition