City managers and the private sector are working to reverse the exodus from inner cities, but the property management sector is divided on whether the drive to revitalise these areas will offer it any benefits.

Heidi Rix, the general manager of property management at RMB Properties, supports renewal, which she says has helped the company turn around a number of properties in the Johannesburg CBD and sell them at optimal value.

Retail activity in the inner city is flourishing and we have limited vacancies in the CBD properties we manage, says Rix.

She believes the benefits of rejuvenation for property managers are numerous.

The first positive impact comes from the heightened visibility of increased security, cleanliness and improved maintenance in that these aspects ... increase the desire of individuals and businesses to initially visit the area and eventually consider reinvesting, participating and taking occupation in the area.

Further stagnation or decline of CBD areas can be halted as the demand for space increases and vacancies begin reducing.

As occupancy levels rise, market rentals begin to adjust to reasonable levels and buildings begin to increase in value perhaps one can even view this value adjustment as a correction of an abnormal market due to the prior stagnation and decline, says Rix.

But she concedes that many challenges lie ahead.

Entire CBD areas must be upgraded rather than concentrating on nodes within the larger CBD borders.

Also, it is important to achieve a complementary and economically sound mix of commercial, retail and residential use within the CBDs, particularly in light of the current demand and trend of converting CBD space to residential use, says Rix.

Also critical is anticipating market and economic trends and positioning inner cities to compete in the long term, as well as reducing the number of massaction protests in CBD areas.

Elaine Wilson, property economist at Viruly Consulting, says CBD vacancy rates are declining after three years of oversupply.

South African Property Owners Association figures show the most notable decline was in the Pretoria CBD, where the vacancy rate dropped from 5.8% in the first quarter of 2004 to 2.8% in the fourth quarter, while in Cape Town, vacancies fell from 12.4% to 9.9%.

In Johannesburg, vacancies dipped from 25.1% to 24.7% and in Durban from 16.9% to 16 %.

However, Wilson says that while inner-city revamps are playing a role in stimulating letting activity, the lower vacancy figures are slightly misleading.

I am not convinced that there has been a real drop in office vacancy rates in the Cape Town CBD as a lot of the traditional office space has been converted into retail or residential space, says Wilson.

She adds that the benefits of rejuvenation will filter through to the property management sector only by mid2006 when the revamps begin to take shape.

Yacoob Latiff, property management executive at Old Mutual Properties, says the migration from inner cities to more affluent areas meant that many landlords did not maintain and improve their properties.

We persevered and kept looking after our assets, although it has not been easy because of the negative perceptions surrounding safety and cleanliness, says Latiff.

The move to convert old office blocks into residential units started in Cape Town and is now taking off in Johannesburg.

People want to live near their places of work. It will assist growth in the CBD, ultimately adding value to our assets, says Latiff.

But not all property managers are convinced they will benefit from innercity renewal.

Marna van der Walt, CEO of Gensec Property Services, says that while CBD rejuvenation can create additional markets, much of the associated property management is handled by city authorities, limiting the opportunities for commercial players.

Also, the newer decentralised zones have better parking ratios than the inner cities and are nearer to amenities such as gyms, shops and restaurants, although these advantages are reflected in the higher rentals.

Decentralised zones are preferable not because of the perceived crime and grime in inner cities, but rather because modern buildings are seen as more favourable than old ones, says Van der Walt.

But JHI Property Management regional manager Steven Teixeira believes crime is still a big deterrent to businesses and individuals moving to the inner cities.

Many people do not feel safe about leaving their buildings at lunchtime. I have been looking after businesses in the Johannesburg CBD for eight years and I have not seen a meaningful improvement in occupancy levels. And I do not expect an improvement any time soon, says Teixeira.

He says an increased residential component will not necessarily foster growth in the inner city.

More people might choose to live in the CBD but once they leave the security of their buildings, they will go elsewhere to shop and find entertainment, says Teixeira.