Movement in office space demand as business move out of Sandton

The influx of a number of large corporates into the Sandton CBD will place further strain on the already stretched infrastructure, especially the roads which will impact heavily on the traffic congestion. As such, many smaller and medium sized Sandton-based enterprises have moved or are looking to move to other business nodes in the vicinity such as Rosebank, Bryanston, Rivonia and Morningside.

This is according to Chris Renecle, MD of Renprop, who says that Ernst & Young and Alexander Forbes already have new offices in the Sandton CBD area, while the Webber Wentzel, Sasol and Discovery buildings are under construction and construction on the Old Mutual building is about to commence.

Renecle points out that the areas of Rosebank, Bryanston, Rivonia and Morningside are just as well-placed as Sandton in terms of access to major road networks and surrounding amenities, with Rosebank also benefitting from the Gautrain stations in and around the area.

This shift of businesses looking for space outside of the Sandton CBD has created some movement in the office space sector, with many of the businesses looking for premises ideal for owner/occupiers.

“Over the past six months we have seen an increase in demand for sectional title office space, particularly in the Bryanston and Fourways areas. That said, the office space market is still under strain, with rentals under pressure,” says Renecle. “Office space vacancies are still high, with the SAPOA Q1 2015 Office Vacancy Report indicating a national office vacancy rate of 11.2% which is slightly higher than reported in the previous quarter. On the ground, we are starting to see the office space vacancies gradually reduce. The report indicates an improvement in the vacancy rate of good quality offices, which is in line with the areas where we are currently seeing demand in the market,” says Renecle.

Weighing up alternative areas to Sandton for businesses seeking high quality office space, Renecle points out that Bryanston is home to a number of blue chip corporates such as Microsoft, AVI and Tiger Brands which have premises in the area along with a number of other big brands. “The Bryanston area is also a popular area for advertising agencies and related industries and support services.”

Bryanston however, has not been without its infrastructural challenges, although these primarily revolved around electricity supply and capacity. “The broader Bryanston area has geared up for the development of business premises on an infrastructural level, for which developers had to pay, but the power situation has been resolved in terms of capacity. This is evident in the fact that a number of business parks have been developed in the area in recent years.”

Renecle says that businesses looking for owner/occupier premises can expect to pay anywhere between R22 000/m2 and R26 000m2 for office space in the northern areas of Johannesburg, depending on their size requirements. 

In conclusion Renecle says that while Renprop Commercial has seen available office stock start to gradually decrease, which could 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.

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