Real Estate Investor Magazine South Africa August/September 2019 | Page 38

OFFICE
What is driving SA’s
office leases?
BY BEUKES VAN HEERDEN
It has been predicted this year that among South
Africa’s three major commercial segments, office
space will be the biggest loser.
W
ith a stubbornly high vacancy rate that has Johan-
nesburg at nearly 13%, its highest peak since 2010.
This is unsurprising given that offices are largely
driven by economic growth. Despite these high vacan-
cies, new development activity continues in certain nodes
in Johannesburg, with reports anticipating that around
106,420m² of space will come onto the market in high-end
nodes during this year and into 2020. Added to this is a
flurry of refurbishments and renovations. Between the of-
ten-conflicting needs of property developers and owners,
what does the market need?
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AUGUST/SEPTEMBER 2019 SA Real Estate Investor Magazine
According to the South African Property Owners
Association (SAPOA) report on office vacancies released in
April 2019, an interesting trend has emerged and points to a
connection between the vacancy rates of different nodes; as
one node improves another worsens. What this signifies is a
tenant pool that is not growing but rather rotates as tenants
look elsewhere for efficient solutions to match their changing
workplace needs.
Location is a key driver for companies when seeking office
space. As much as 87% of national office development activity
occurs in just 10 nodes, with Sandton, Waterfall and Rosebank