THE office property market is beginning to strengthen, with nominal rentals in central business districts (CBDs) and decentralised nodes such as Sandton rising, according to the latest Rode’s Report, released by property economists Rode & Associates.
The report said nominal grade-A CBD and grade-A decentralised office rentals were still rising nationally in the second quarter. Nominal rentals include building-cost inflation. Grade-A refers to offices typically not older than 10 years.
CBD office rentals were collectively up 15% on the year earlier, while decentralised rentals were up 7%. CEO Erwin Rode said this was partly because residential conversions of office space had reduced supply.
“A second reason is that it looks like some of the CBDs in SA are recovering. Cape Town’s CBD is so healthy that its rental levels are on par with good decentralised nodes on the Cape Peninsula,” said Rode.
Johannesburg’s CBD’s situation was “completely different,” he said. “Its base is much lower. It is also improving and at a faster pace than decentralised areas.
“I am not convinced yet that it’s going to be sustainable and that the Johannesburg CBD will reach the same respectability as Cape Town’s CBD,” Rode said.
Decentralised rentals were revealing the “first stirrings of what can be expected over the next few years”, he said. “I am expecting double-digit rental growth from decentralised nodes for a number of years to come.”
Gerald Olitzki, MD of OPH, which owns office properties in Johannesburg’s CBD, said his company was experiencing “immense demand for office space”.
Publisher: Business Day
Source: Nick Wilson
