Nick Wilson
6 February 2008
Johannesburg — OFFICE vacancies in Cape Town are so low that the office market is becoming a "pressure cooker", as demand outstrips supply, according to Baker Street Properties.
Dave Russell, director of Baker Street Properties, says the latest Sapoa office vacancy figures confirm that vacancies have plummeted throughout the country, and that Cape Town vacancies are among the lowest.
In Claremont, A-grade vacancies have reached 1,2%, while Rondebosch and Newlands have a vacancy factor of 1%.
Demand for office space in Cape Town's central business district (CBD) has taken vacancies down to 4,6% while there is no space available at the Victoria & Alfred Waterfront.
Russell says that anybody who needs space of more than 1000m' in Cape Town, particularly the CBD, has "very few options".
"There is a pressure cooker because nothing is being built. Historically this is the norm because the market takes a while for the numbers to justify new developments. We are now at this stage," he says.
David Green, MD of commercial and industrial property brokers Pace Property Group, says it is "very difficult" for vacancies in Cape Town to go down any further. He says there is new property stock coming through the market in Cape Town, particularly in the Foreshore precinct. But in these cases rentals will be more than R120/m'.
"Also, Cape Town has very few speculative developments and it is expected that demand will exceed supply and therefore it remains a landlord's market."
It is anticipated that all the CBD office buildings will continue to be renovated and upgraded.
"An example of this would be Shell House, which is a well-known CBD landmark and will be upgraded by its owners, the Atterbury Property Fund. After the upgrade this building too will attract A-grade rentals," says Green.
But property economist Erwin Rode, of Rode & Associates, says while it is true that vacancies had reached those levels at the end of last year, there was a new variable in the form of power outages. He says no one knows what effects these will have on the economy.
"It has the potential to slow down the demand for space and nobody can say for sure whether that is going to happen. If only we can wish the power constraint away," he says.
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