Paul Kollenberg, commercial property sector head at Investec Property Group, said that office space in Gauteng was showing a general trend towards lower vacancy levels.

"The past year was defined by upgrades and refurbishments in the commercial property sector. B- and C-grade buildings, which were largely vacant, were refurbished to fully let A-grade offices," he said.

Mark McCreedy, MD of McCreedy Friedlander, said that there was some vacant office space, but it was very limited.

Currently, prime asking rentals for existing office space are between R90/m? and R100/m? net, and operating costs are averaging at R20/m?.

McCreedy said that any new development that was being planned to come on stream late this year or early next year would have to ask rentals of between R110/m? and R120/m? net to show a competitive return.

Escalation clauses have come down slightly and are averaging about 8%.

"Demand for prime office space is exceptionally high, and in particular from smaller tenants seeking to acquire sectional title offices. Ownership of office space is the flavour of the month, and can be characterised as a feeding frenzy when a new sectional title office development is put on the market," McCreedy said.