Prime office space still in demand

At the end of June, the national office vacancy rate was 10.6%, according to the South African Property Owners’ Association (Sapoa). This marked the largest quarter-on-quarter decline since 2008.

Although high office vacancies continue to plague the listed property sector, with weak economic conditions creating sluggish demand, there has been some respite in the second quarter of this year.

At the end of June, the national office vacancy rate was 10.6%, according to the South African Property Owners’ Association (Sapoa). This marked the largest quarter-on-quarter decline since 2008.

Over the past few months, blue chip South African companies and multinationals had moved into new or premiumgrade (P-grade) offices or prebooked space in developments that were under way, said Growthpoint Properties MD Estienne de Klerk.

Growthpoint is the largest South African-based listed property company.

According to Sapoa’s official definitions, a P-grade office is a “top-quality, modern space which is generally a pace setter in establishing rentals”.

“Economic growth is low and demand side for offices is struggling overall. But at the top end, we are still seeing demand from top South African companies and multinationals. This is true for our competition, such as Redefine (Properties) too. Their new building 90 on Grayston, in Sandton, was let quickly,” Mr de Klerk said.

Sapoa said even though office vacancies fell over April, May and June, this had not yet become a clear trend.

“There still isn’t a clear downward trend in the national vacancy rate. Of the last 10 quarters, there were only four periods of positive net take-up.”

As much as 32% of South African listed property consists of office space, according to research by Afrifocus and Stanlib Research.