06 Apr 2006

THE current commercial boom at Century City will see its office component nearly doubling in size to 175 000 square metres within 18 months.

Currently the fifth largest node surveyed by the South African Property Owners Association for their quarterly vacancy survey, the new office space under development will push Century City into fourth position behind the CBD, Bellville and Pinelands and ahead of Claremont, Ronde-bosch/Newlands and the Waterfront.

The current building boom is a response to strong market demand for commercial space at Century City where office vacancies are currently at around 3% but expected to fall further when current negotiations are completed.

The recent completion of some new commercial developments totalling 13 500 square metres - primarily for owner occupiers with only 650 square metres remaining to be let - has already increased the office component to just under 97 000 square metres.

A further 29 000 square metres of office space is expected to be completed by January 2007. This includes the first phase of the Colosseum, Knowledge Park 2, Boulevard Square, the first phase of Millennium Park business park; Spur's new head office at Century Gate and the Louis Group's Century Falls first phase.

This will be followed by a further 49 000 square metres of new offices which are expected to come on stream by August 2007 including new regional offices for Liberty Life, the second phase of Spearhead's Knowledge Park 2 development, the first 17 000 square metres of The Estuaries office park, the second phase of Millennium Park, the Quadrant office park by Amdec and a second office block in The Louis Group's Century Falls project.

Greg Deans, managing director of Century City Property Developments, said while the bulk of new commercial development taking place was for owner occupiers, there was also a limited amount of development taking place for the office rental market.

"This is the first time in the history of Century City that we are seeing this happen and it is very good for the precinct in that we have just not had the stock to service the demand from those companies wishing to be located here. In particular it will allow new opportunities for smaller to medium size companies who do not necessarily want to own their own premises," he said.

Deans said they were managing this situation very carefully and would only release further land for development when current projects warranted it.

The strong demand for offices at Century City, he said, was also being seen at their mixed-use Colosseum development where only 2 000 square metres of the 8 300 square metres of offices remains to be sold or let.

Deans said the lack of new development in recent years had created pent-up demand in the office market with market commentators predicting that this was putting upward pressure on rentals which were expected to increase 30% to 40% between June 2005 and June 2007.

"We are already seeing this kind of movement with rentals passing seamlessly through the R100 per square metre barrier."

He said like residential purchasers, office tenants were becoming a lot more discerning and while rentals would always be a major consideration in choosing new offices, an increased e weighting was been given to other criteria such as lifestyle, security and location.