OFFICE
Redefining Prime Office Space
Sustainable innovation and alternative uses key
A golden triangle links South Africa ’ s prime office locations running from Umhlanga / La Lucia in Kwa- Zulu-Natal across to the Sandton CBD in Gauteng and down to Century City in the Western Cape . While each precinct offers quality P- and A-grade space for high-end occupiers and investors , there is no doubt that economic realities , as well as over-supply , are driving landlords to further green innovation , rental incentives and new ways of thinking about space-usage . The latest Office Market reports released by Broll Property Group bring these three locations into sharp focus .
Sandton sits at the heart of Gauteng , the acknowledged power-house of the South African economy , and continues to reflect positive , albeit slower , demand for prime office space . Nevertheless , it is becoming increasingly hard for those seeking premium-grade space for their businesses to ignore the advantages offered in both the Century City and Umhlanga / La Lucia nodes , says Broll in its reports .
Century City has marketed its live-work-play ethos over two decades . Its comprehensive perimeter security fencing , eco-friendly landscape , smooth integration into the Cape Town transport system and wide-range of amenities have secured the attention of large corporate tenants in professional services , consulting , engineering , IT , marketing , financial services and the advertising and media sector . According to Broll ’ s Century City Office Market report , vacancies currently sit at 8 %, by contrast Umhlanga / La Lucia has an average vacancy rate of 5 %, with Sandton at 16 %.
The Umhlanga / La Lucia node presents a contrasting environment to both Century City and Sandton , its sea views being an immediate differentiator . There is enormous development in Umhlanga Ridgeside , New Town Centre as well as in neighbouring Cornubia and the Sibaya Precinct to the north , all of which open fresh opportunities for tenants and landlords alike . New office space coming onto the market is regarded as a good indicator of a node ’ s growth . With a vast number of developments having recently come onto the market and many new office developments scheduled to be launched within Umhlanga / La Lucia in the next 12 – 24 months , growth is definitely evident .
The nodes all house common amenities which include hotels , conference centres , upmarket retail offerings and highend restaurants . Security is paramount throughout .
From an investor perspective there ’ s growth in all three nodes , but growth in Century City and Umhlanga / La Lucia is tipping the scales , notes the Broll reports . An oversupply of office space in Sandton together with the emerging trend of clients seeking smaller office units has constrained this market somewhat . Sandton landlords are having to be flexible in their offerings and innovative in their thinking as they look at new ways of marketing vacant space . However , the demand for prime-grade Green Star office accommodation is still more pronounced in the Sandton CBD , hinting at continued interest in the area from high-end investors and occupiers .
From Broll ’ s reports it is clearly evident that South Africa ’ s “ golden triangle ” offers world-class office space and amenities . While Sandton has long topped the bill as a prime office destination , Century City and Umhlanga / La Lucia are riding high as evident in the high quality of new office space and associated amenities coming on line in these competing regions . However , Sandton ’ s over-supply and the resulting pressure on rentals have sparked an innovation trend , says Broll , with the addition of quality mixed-used projects .
Source : Broll
P-GRADE GROSS ACHIEVED RENTALS IN ALL THREE REGIONS PRESENT AS FOLLOWS :
Century City : R175 – R195 / m ²/ month Sandton CBD : R220 – R250 / m ²/ month Umhlanga / La Lucia : R170 – R200 / m ²/ month
38 AUGUST / SEPTEMBER 2018 SA Real Estate Investor Magazine