By Ian Fife

Bad news for corporate SA is last week's signing by law firm Webber Wentzel of a lease for the penthouse on listed fund Redefine's Convention Tower in Cape Town at R200/m2.

The triple-A building adjoining the city's convention centre was letting for half that 18 months ago. Its meteoric rise is a leading indicator of top office rents everywhere.

Webber Wentzel paid R130 for the first section of the building that it rented last year. It expanded to 4 500 m2 of the 15 000 m2 building but hesitated to pay the R200/m2 asking rent for the 1 100 m2 penthouse.

"But faced with a competing offer from an international bank, they had little choice but to take the space at the asking rental," says Mike Flax, executive director of Madison, the building's developer and Redefine's asset manager.

The Tower's latest rental is well above equivalent buildings in Johannesburg, according to David Green, CEO of commercial brokers Pace. "Small spaces of about 100 m2 are going at about R175/m2, but large premium space would still be about R120/m2 Large A-grade space can be had for around R85/m2."

But rents will rise fast from now.

Financial Mail