Landlords cash in on Prime Office Space

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Discovery Group pays R23 million a month to rent its plush global headquarters in Sandton. The building is considered to be "the largest single-phase commercial office development in Africa." Discovery Group pays R23 million a month to rent its plush global headquarters in Sandton. The building is considered to be "the largest single-phase commercial office development in Africa."

Appetite for well-positioned P-grade (Prime grade) Offices appears to go against the grain of the current sluggish national economic climate — SA Commercial Prop News has learned.

Generally, the office sector remains in recovery mode with a sustained improvement in the office vacancy rate relying on a strengthening of macroeconomic drivers such as economic growth, business confidence, financial and business services capital investment.

Demand for commercial offices remains poor as companies cut back on costs. But this is not the case when it comes to P-grade (Prime grade) office space, says Ortneil Kutama, SA Commercial Prop News Media Director.

Buildings are categorised differently depending on what sector of the market they are in, the size and age of the unit, their usage type, what features they have as well as where they are located.

P-grade office is a top-quality, modern space which is generally a pace setter in establishing rentals and includes the latest or recent generation of building services, ample parking, gym, prestigious lobby finish and good views. 

Corporates and Multinationals are moving into new premium offices, leaving older A-and B-grade offices vacant.

“Despite tough economic conditions, the competitive advantages of well-positioned P-grade offices continue to drive uptake scaling the office property sector,” said Kutama,

This has been highlighted by the recent prime developments in areas such as Sandton, Rosebank,  Cape Town's Foreshore and Century City with leasing deals being concluded by major listed property players.

Financial services giant Discovery Group pays R23.3 million a month to rent its plush global headquarters in Sandton.

The annual fee equates to R280 million, and is set to escalate dramatically over the following 15-year lease agreement it has with Growthpoint Properties and Zenprop Property Holdings, who is the majority shareholders of the development, which cost R3 billion to build.

The building is considered to be "the largest single-phase commercial office development in Africa" and is also the largest building to receive a five-star rating from the Green Building Council SA.

A new 15 storey, Rosebank Link, was recently completed with all its office space fully let.

The iconic building is located in Oxford Road in the heart of bustling and cosmopolitan Rosebank and strategically positioned on the doorstep of the Rosebank Gautrain station.

Rosebank Link with its expressive steel and glass clad shell provides high level of environmental control within the office space maximising available natural light and as a direct consequence reduce energy consumption.

Offices have been the worst performer among traditional property types such retail and industrial, for a number of years as they struggle to shake off a stubborn vacancy rate of about 11%.

The national office vacancy rate was 11.2% at the end of third quarter of 2018 according to the South African Property Owners’ Association. 

But landlords in the burgeoning office hub of Sandton, Rosebank,  Cape Town's Foreshore and Century City are not shy to charge premium-grade office tenants top-end rentals, given the demand for space in these districts. Rentable office space in these new building is currently listed at around R260 per sqm.

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SA Property Market  |  Growthpoint Properties  |  Office Market  |  Zenprop Property Holdings  |  Discovery Health  |  Ortneil Kutama