Deans said the strong pickup in demand which has seen office vacancies drop to an all-time low of 4,3% in January against 13,04% a year ago, was being spurred by a number of factors.

"Firstly there has been a period of consistent growth in the South African economy - currently in excess of 3% - which historically leads to fairly strong take-up of office space.

"In addition there has been a period of relatively low interest rates which has proven sustainable. The current outlook is that interest rates should remain stable for at least the next 12 months.

"Furthermore there has been stability in the rand exchange rate which enables forward planning."

Deans said the conversion of a significant amount of office space in both the CBD and some decentralized nodes, such as Claremont where vacancies had been extremely high a number of years ago, had also impacted positively on office vacancy levels. In Claremont alone, about 15 000 square metres had either been converted to residential or demolished to make way for residential developments with plans for a further 9000 square metres to 10 000 square metres of conversions in the offing.

He said adding to pent-up demand was the fact that very little new office space has been bought to the market on a speculative basis in the past four to five years.

"Faced with these realities and the shortage of new buildings coming on stream, we are now seeing larger tenants whose leases are coming up for renegotiation choosing to stay put and rather looking to their existing premises to house their expansion needs. This has resulted in the displacement of smaller and medium sized tenants in these buildings many of whom are now seeking to take control over their own destiny by purchasing their own premises.

"Given the low, stable interest rate scenario and all other factors considered, this makes good economic sense. We have literally been swamped with enquiries from potential office owner-occupiers and investors for office space of between 300 square metres to 1200 square metres and our growing waiting list of those seeking premises in this range has prompted us to accelerate the delivery of a number of exciting new commercial developments catering for this sector of the market, details of which will be announced shortly."

Demand from this sector, he said, has seen the success of Fusion Quarter – a development of four standalone office blocks in the Waterford Precinct – where three of the blocks, each measuring about 500 square metres, had been sold and the fourth was now under offer.

Deans said although the greatest demand for new office space was coming from small to medium-size users they were also experiencing an unprecedented enquiry level from larger owner occupiers and work on the first new commercial block – a 10 500 square regional head office for an international company – had just started with more to follow.

"The demand supply chain of the past four to five years has definitely changed. The demand pressure we are seeing in the market is resulting in a firming of rentals which is making the prospect of new development completely viable."