Office rentals still in lull despite healthy office demand

05-04-2004

Offices in South Africa's suburbs are in growing demand, yet are still not commanding higher real rentals, the latest issue of Rode's Report shows.

However, editor Dirk De Vynck contends that a continuation of the healthy office take-up currently experienced should eventually underpin an upturn in real decentralized office rentals.

Notwithstanding the healthy office take-up in Johannesburg decentralized, grades A & B office vacancies for the region continued their upward trend, which implies that new offices are being added at a faster rate than the take-up of office space. This growing oversupply explains why the recovery in office rentals has not yet set in.

Pretoria especially has shown a hearty demand for decentralized office space. Brooklyn has been the biggest contributor to this positive take-up, whilst strong demand has also been noticed in Highveld Technopark and Centurion.

In Cape Town, the demand for decentralized office space is also on the up. Interesting though, is that the take-up in the Cape Town CBD during 2003 was higher than that recorded in the decentralized nodes of Cape Town.

Durban decentralized also recorded rampant growth in office demand, with almost 40.000m² taken up in 2003.

“If the robust take-up continues, it should only be a question of time before real office rentals start climbing again. According to our own forecasts, the turnaround in real decentralized office rentals should appear from the end of 2004,” says De Vynck.