Real Estate Investor Magazine South Africa June 2015 | Page 41

REI COMMERCIAL

RETAIL TRENDS IN SOUTH AFRICA

EXPERT Q&A
INCREASE IN DEMAND FOR
SECTIONAL-TITLE OFFICE SPACE

A

lthough muted growth is expected for the sector, retailers targeting the value
chain will continue to show growth slightly higher than sector averages.
“Given the current state of the economy, we will see muted growth coming
from most retail categories,” says Preston Gaddy, Divisional Director: Strategic Retail
Leasing at Broll Property Group.
However, national fashion retailers will still expand but will be more cautious
in their selection of new sites. Meanwhile, grocery chains continue to target the
mass market and the opportunities in rural and township areas, however, these
developments are starting to ‘dry up’. Grocery chains will have an increased presence
in smaller format stores.
Shopping centres with full standby power are now becoming the preferred choice
for many retailers, as this means they can continue trading even during load shedding
periods.“Those landlords that have invested in standby or alternate energy will have
the ‘value add’ that retailers are seeking,” Gaddy says.
Shopping centre security will continue to be a challenge for most landlords.
Shopping centre owners will look to their existing centres to unlock value with
limited ‘green-field’ opportunities. Therefore, refurbishments, expansions and redevelopments will mean significant investment by owners.
Landlords are seeking to re-tenant these centres to adapt to changes in
demographics and spending patterns.
Value or off price retail will continue to grow in 2015. We are seeing more entrants
in this sector and with consumers feeling the effects of rising costs they are seeking to
stretch their budgets by shopping at these value chains.

Chris Renecle
Managing Director
Renprop Commercial
Q Why are large corporates moving
their premises out of Sandton?

The influx of a number of large corporates
into the Sandton Central Business District
will place further stain on the already
stretched infrastructure, especially the
roads which will impact heavily on the
traffic congestion.
Q Where are these large corporates
moving to?

Many Sandton-based enterprises are
moving to other business nodes in the
vicinity such as Rosebank, Bryanston,
Rivonia and Morningside. These areas are
just as well-placed as Sandton in terms
of access to major road networks and
surrounding amenities.
Q What have you seen happening
in this sector over the past six
months?

Kim Faclier
Managing Director
Go-Dove

Go-Dove’s has hosted it’s tenth auction of Telkom
properties country wide. Auctions in all nine provinces
have succeeded way beyond our expectations, with
a 95% sell-through rate for the online auctions and
100% success rate for all the live auctions, with sales
totalling about R300 million to date.

Andrew Konig
CEO
Redefine Properties

Our domestic priorities include dealing with the
electricity crisis by providing uninterrupted power
supply at our key properties, as well as energyefficiency initiatives and sustainable building
technologies. Letting of vacant space and managing
tenant credit risk is another key focus area, given the
muted state of the economy.
www.reimag.co.za

Over the past six months we have seen an
increase in demand for sectional title office
space, particularly in the Bryanston and
Fourways areas. The office space market
is still under strain, with rentals under
pressure.
Q What is the impact of office space
vacancies on the sector?

Office space vacancies are still high,
with the South African Property Owners
Association Q1 2015 Office Vacancy Report
indicating a national office vacancy rate of
11.2%. We are seeing office space vacancies
gradually reduce.
Q Has available office stock
increased or decreased?

While we have seen available office stock
start to gradually decrease, which can be
an early sign of a potential recovery in
this sector of the market, SAPOA notes that
economic drivers are not suggestive of any
change in this sphere of the commercial
property market in the short term.
JUNE 2015 SA Real Estate Investor

39