Reflecting the turnaround, office rentals in greater Johannesburg have climbed by 4,6% and vacancies have tapered off by 9% over the past year, according to Broll Property Group.
Fran Teagle, director of Broll Property Group's commercial Gauteng division, says the desire to work in mixed-tenant areas away from Sandton's traffic congestion has seen an increase in demand for space in office parks in outlying areas such as Woodmead and Bryanston.
A Broll property research report says that the take-up of space has not been restricted to such outlying areas.
Johannesburg's city centre has seen a 14% drop in vacancies in A-grade buildings, and rentals have increased by around 15% to R35m², largely as a result of the refurbishment of older buildings, to bring them up to A-grade standards, says Teagle.
She says this has been driven in part by the creation of the Main Street pedestrian mall on the western side of the city.
Security has improved, trees and gardens have been planted and open-air coffee shops have been established.
Braamfontein has seen similar improvement regarding roads and security, and there has been a significant take-up of large vacant office space, she says.
Parktown is becoming a sought-after area, with rentals remaining competitive, and being situated outside the city centre seen as an attraction, says Teagle.
Houghton and Melrose remain the prime locations in the greater Johannesburg area, with virtually no vacancies and gross rentals of up to R100m², she says.
Randburg is proving popular with call centres, with affordable gross rentals of about R35m² for expansive offices, making it an ideal area for accommodating large amounts of staff, Teagle says.
As with parts of Johannesburg's CBD, Rosebank has also benefited from a facelift, especially around the retail and restaurant areas.
Teagle says office buildings are being refurbished and in some cases converted to residential apartments, as mixed tenant usage becomes increasingly popular.
In some cases large office blocks are being converted into sectional title offices. Teagle says these are very popular among smaller companies that want to own their own offices but do not want to carry the full costs of maintenance and security.
Teagle says the proposed Gautrain station at the corner of Oxford and Baker Streets bodes well for the area.
Although rentals have remained rather flat for the past year, Teagle says prospects for rental growth look very promising as vacancies have fallen by about 25%.
Sandton continues to flourish as the hub of the financial business district of SA, with rentals in the region of R70m² to R80m². Over the past 10 years, gross rentals have grown at 9% a year, she says.
The City Improvement District in central Sandton has been active in creating greenery and keeping the streets clean and safe, and the introduction of the "men in red" security patrols has led to a significant drop in crime, Teagle says.
New buildings and redevelopment of B-grade buildings continue, with more than 40,000m² being constructed or refurbished, she says.
There has been a rezoning of land from office development to high-density residential development due to increasing demand for living space. This follows the international trend, where mixed-use areas are seeing people move back to the CBD to live, she says.
However, Sandton is losing tenants to the large office parks that surround the CBD in areas like Bryanston, Woodmead and Fourways. As a result Sandton's vacancies remain relatively high at about 370,000m², Teagle says.
Because of competition from residential developers, land in the greater Sandton business nodes is becoming scarce and land prices have risen as much as 20% in some cases, she says.
Teagle says the market is generally very active and Broll expects rentals to rise steadily over the next 12 months.
Business Day
Publisher: Business Day
Source: Inet Bridge
