Office take-up explodes

05-07-2004

Office space take-up around the country has exploded, indicating that the worst is over for this property class.

The latest Rode’s Report figures show that office take-up, the most important indicator of market health and therefore economic growth, is up across the country. Some 480.000m² of decentralised A- and B-grade office space has been taken up in the 12 months to March 2004. This is the equivalent of half the total Sandton CBD office space, says Rode CEO Erwin Rode.

“It seems as if the damage done through the collapse of the ICT sector and recent across-the-board staff rationalisations have been worked out of the system, and that the worst is now over,” he says.
Rode is optimistic about the rental potential for this sector. To replace grade-A office space, a developer needs to achieve rentals of around R90/m². Hence, once existing space is mopped up, rentals will rush to this level.

Johannesburg decentralised showed the biggest improvement. Some 345.000m² were taken up. The best performers were Midrand, Sunninghill, Constantiakloof and Bryanston. While the Johannesburg CBD still showed a 26.000m² contraction in demand, the 80.000m² CBD take-up around the country would indicate that CBD office vacancies are bottoming out.