Sandton is catching up with decentralisation trend

Sandton has lost a significant number of big office tenants in the past months, according to a report released by the South African Property Owners Association (SAPOA).

Sandton, Johannesburg's premier business centre, has lost a significant number of big office tenants in the past months, according to a report released by the South African Property Owners Association (SAPOA).

Office rental vacancies in Sandton, SA’s largest decentralised business hub, has surged to a 10-year high of 14,2%, Sapoa says.

New development in Sandton has increased sharply over the past two to three years, particularly around the Gautrain station. The bulk of the vacancies are in these state-of-the-art new buildings.

The Sapoa report notes that over the past 12 months alone, the amount of unlet prime space has increased from 2000m² to 54000m².

Rode & Associates property economist John Lottering says the jump in Sandton’s vacancy rate probably reflects weak demand for office space as a result of muted employment growth.

He says it is a concern that even more new space is likely to come onto the Sandton market over the next year or two.

Sapoa figures show there is 258000m² of office space under construction or in the pipeline in Sandton.

That’s about a third of all new office development currently planned for SA as a whole.

The worry for property owners is that rising vacancies will put pressure on rental returns.