What to expect when looking for office space in Cape Town
The Cape Town office property market is showing constricted demand for new and sizeable office space, with the minimal activity consisting of enquiries where existing occupiers search for improved value. Recent activity in the office sector has mainly been the relocation of large corporate tenants to newer and more energy-efficient buildings. The South African macroeconomic environment continues to experience stability problems, not least of which is the mining sector unrest. For the quarter ending June 2014, economic growth and confidence within financial and business services (a major constituent of the office property market) remain diminished. Employment growth has been slowing in both the public and private sectors, likewise impacting on the amount of office space needed.
Vacancies
The SAPOA Office Vacancy Survey Q2 results show the vacancy rate of offices in the inner city of Cape Town stands at 13.9%, representing a sharp increase in vacancies in the CBD over the past two years. Concerns exist that should the weakened climate drag on, there will be a further uptick in vacancy levels, especially among the more dated stock, once current developments are completed and added to the office supply. There is an expectation the new space will increase competition between landlords: the currently tough letting environment focused on tenant retention has meant a downturn in average office rental prices.
Compared to the CBD, areas with relatively low vacancies include the V&A Waterfront, Century City, Claremont and Pinelands with V&A Waterfront in particular being very low.
Cape Town office property market – new developments
The completion of the Portside tower block early this year is a notable development, in that it represents the latest in environmentally sustainable building design – over 52000m2 of prime office space – and, as a flagship building of the city, is the tallest in Cape Town. The integrated systems reflect considerable foresight in the architecture of the Portside – superb views and interior design; lighting for staff comfort, productivity and, indeed, corporate performance; recycling, energy and water efficiency for lower utility bills; and integration with the transport system are all part of the package for tenants who take up occupancy in the Portside.
For those prospecting for new office space, a tour can be arranged easily
