SAPOA office vacancy survey confirms increasing vacancies

An artist's impression of the new Allan Gray headquarters located in the Clocktower Precinct of the V & A Waterfront. A new office development currently under construction in Cape Town.

The last SAPOA Office Vacancy Survey for 2011 confirms the ongoing trend of increasing vacancies in Cape Town with 6 of the 7 nodes included in the survey showing increases on the previous quarter’s figures.

Dave Russell, a director of Baker Street Properties, says,” While most of the increases are marginal, they are none-the-less a confirmation of a continuing trend that should be of concern to landlords.

“In the Cape Town CBD the combined vacancy of Premier, ‘A’ and ‘B’ grade offices is now at 10.5%.  At the same time a year ago the vacancy was 9.7%.  In the Southern Suburbs we now have a combined vacancy of 13.7% in Claremont and 7.3% in the Rondebosch/Newlands node.”

Russell adds, “In the Northern Suburbs the Bellville vacancy average is now 9.4% while a year ago it was around 6%. It is encouraging to note that Century City vacancies have reduced over the past year from 10.5%  to 8.8% this quarter.

“Pinelands also seems to be bucking the trend and presently has a vacancy of 3.4%, although this is one of the smaller office nodes. While for the popular V & A Waterfront  the figure is 6.9%, with the new Allan Gray office complex now under construction in the Clock Tower Precinct.”

Russell says that there have not been many new office developments in the Cape Town CBD for some years; however, there is now the commencement of Portside in the CBD, which will provide a total of 52,000m² of which 25,000m² will be available to the market from early 2014. This new development will accommodate the new regional offices for FNB and reflects the confidence that corporates have in the CBD and periphery.

One of the factors influencing interest in the CBD and periphery is the availability of public transport.  The new IRT system, which gets staff to/from work more quickly and efficiently has proved to be very popular. The further expansion of this service will contribute to the continued interest in the city for future development. 

“While the economic downturn has been responsible for the increasing vacancies, it has created some attractive opportunities for office tenants, who are in a position to take advantage of present market conditions.

“As a property company marketing virtually all of the vacant office space in Cape Town, both leasing and sales, we have seen many companies who shelved their expansion or relocation plans several years ago, now coming to the market taking advantage of the concessions currently offered by landlords.

“Tenants are therefore encouraged to position themselves accordingly and use this opportunity to take a long term position on favorable lease terms,” concludes Russell.