Pretoria CBD gets makeover as government comes marching home again

Pretoria, the administrative capital of South Africa also known as the municipality of Tshwane, is undergoing something of a re-gentrification.

Pretoria, the administrative capital of South Africa also known as the municipality of Tshwane, is undergoing something of a re-gentrification. Fittingly, it is happening on the back of a return of government to the inner city, with a view to improve service delivery.

BEE-rated landlords in good shape as rentals continue to firm, according to Pretoria CBD Office Market Report 2012 released by Broll Property Group.

Turning of the tide

Notwithstanding the city’s repute as an important industrial and commercial centre and its surfeit of public transport (Gautrain, bus, taxi and Metrorail services), it has for years experienced a slow process of decentralisation – like many others in the country.
 
In Pretoria’s case, the exodus benefited nine outlying office nodes – Arcadia, Brooklyn, Hatfield, Lynnwood/Menlopark, “the old east”, Menlyn/Faerieglen, Pretoria’s eastern suburbs, “the new east”, Centurion and Highveld Technopark in the south.
 
Many departments have however now returned to the city, including Health, Transport, Justice & Constitutional Development, and the National Treasury. The CBD is also home to foreign embassies and diplomatic missions.
 
Leasing
To accommodate the home-coming, and in keeping with the Central Improvement District policy, many buildings are undergoing refurbishment. (The CID is also responsible for ensuring streets are kept clean and free of informal traders.)
 
With vacancies remaining extremely low at under 1% since 2009, rentals have remained stable at R80/m², increasing to R85/m² only at the end of 2011. With no land left for development, many of the older C-Grade buildings have had to be demolished, making way for new developments. The outlook is for rentals to strengthen further.

Landlords are therefore in the relatively comfortable position of a “captive” tenant base, largely composed of government and prepared to sign long-term leases with landlords who are – it should be noted – in possession of good BEE ratings.
 
In addition, owners should be mindful of the need to remain competitive due to the availability of newer buildings in other areas.