OfficeVacancy - SAPOA · Q4: 2014 DECEMBER 2014 SAPOA CONTACT DETAILS T: 011 883 0679 F: 011 883 0684 Email: [email protected] Web: 1 The South African macroeconomic environment

Report compiled by IPD

www.sapoa.org.za

OfficeVacancySURVEY

RESEARCH

OFFICE VACANCY SURVEY REPORT

Q4: 2014 DECEMBER 2014

SAPOA CONTACT DETAILS

T: 011 883 0679 F: 011 883 0684 Email: [email protected] Web: www.sapoa.org.za1

The South African macroeconomic environment continues to face several headwinds. In saying that, several key drivers of the office sector has started showing signs of stabilisation.

As at Q4 2014, the national office vacancy rate as recorded by SAPOA was 11.1% - down from 11.6% a quarter before. The 50bp improvement was the biggest single quarter decline in the overall vacancy rate since the second quarter of 2007. Despite the improvement in the vacancy rate it remains high and would be expected to weigh on real asking rental growth in the short to medium term.

The latest quarter saw asking rentals post its first above-inflation year on year increase since 2010 by growing by 5.8% y/y.

The current phase of the cycle should be viewed in the context of the period 2000-2001 when both the office vacancy rate and macroeconomic fundamentals were at a similar crossroads.

The latest quarter saw an improvement in the vacancy rate of all office grades with the exception of prime offices which saw a marginal increase. Both A and B-grade offices recorded improvements of 40bps relative to a quarter before.

Prime office vacancy rate ended the quarter 40bps up on 6.3%. Unlet new developments continue to be the cause of the prime office vacancy rate moving higher.

As was the case in the previous two cycles when vacancies were nearing peak levels, inner city office vacancies are significantly higher than that of city decentralized office nodes.

During the quarter ending December 2014, the national inner city office vacancy rate improved to end at 14.9% while the country’s city decentralized nodes posted an aggregate vacancy rate of 9.7% - 50bps down from the previous quarter.

Development activity, although slightly down on the quarter before, remained high at Q4 2014 with ~707,000sqm under development.

While development activity has been trending up since 2010, the amount of speculative development has been trending down ever since the recession

Despite the 50bp improvement recorded during the current quarter the office sector can still be seen as being in a slowdown phase because of increasing vacancies and slow rental growth when viewed on an annual basis.

QUARTER 4 2014:

Key Findings





The South African macroeconomic environment continues to face several headwinds. In saying that, several key drivers of the office sector has started showing signs of stabilisation.

Financial & Business services – a key leading indicator of office demand – recorded growth of 1.9% for the year ending September 2014. While this is well of the lows of the recession, arguably a level of at least 3.5% is needed to catalyse an upwards shift in employment growth and business confidence.

Business confidence for the quarter ending December came in at 51 (with 50 being neutral) – meaning overall sentiment in the business community is now marginally positive – possibly implying that executives are still taking a wait-and-see approach before committing to larger business premises.

Non-farm jobs growth recorded an encouraging 2.6% increase for the second quarter of the year. More of the same is needed in order to tip the office cycle into a situation of excess demand as the total number of non-farm jobs are still below that of 2007 levels.

Economic Drivers of the Office Sector

FIGURE 1:ECONOMIC DRIVERS OF THE OFFICE SECTOR 2004-2014

Source: StatsSA, RMB/BER





As at Q4 2014, the national office vacancy rate as recorded by SAPOA was 11.1% - down from 11.6% a quarter before. (Figure 2). The 50bp improvement was the biggest single quarter decline in the overall vacancy rate since the second quarter of 2007.

In square meters terms, a total of 270,000sqm was let during the past quarter while 203,000sqm of new stock was added to the market. This resulted in a net area of 67,000sqm being absorbed during the quarter.

The latest quarter also saw asking rentals post its first above-inflation year on year increase since 2010 by growing by 5.8% y/y.

Despite the 50bp improvement in the vacancy rate it remains high and would be expected to weigh on real asking rental growth in the short to medium term.

The current phase of the cycle should be viewed in the context of the period 2000-2001 when both the office vacancy rate and macroeconomic fundamentals were at a similar crossroads. While there were similar improvements in vacancy rate during that period, a spike in interest rates following the dotcom crisis saw a further deterioration in the office vacancy rate. Currently, a sustained improvement in the office vacancy rate very much relies on a strengthening of key drivers such as economic growth and business confidence.

National Office vacancy & rental growth trend

FIGURE 2:LONG TERM VACANCY RATE & ASKING RENTAL GROWTH 1990-2014

Source: SAPOA





Comparing the vacancy rate of the current phase of the property cycle to the previous two cycles provides an interesting perspective.

Despite the office vacancy rate doubling since mid-2008, it is still below the peaks of the previous two cycles (1993 and 2003). The current cycle is also flatter and more drawn out than the previous two – indicative of the current low growth environment coupled with high structural unemployment.

While all three of these cycles were unique in terms of economic drivers and key events, the % movement in

the vacancy rate from its bottom to peak is identical in all three cycles. All three cycles saw increases of ~6% from the trough in the vacancy rate to the peak.

While the current level of vacancy may be similar to 2006, vacancy rates were then on the way down - buoyed by an economic growth rate of above 5%.

As mentioned before, the current phase of the office property cycle is more comparable to the period 2000-2002 when the economy faced similar headwinds in the wake of the dot-com crisis.

Comparing the current phase of the Office Property cycle to the previous

FIGURE 3A:CURRENT VACANCY CYCLE COMPARED TO PREVIOUS TWO

FIGURE 3B:VACANCY RATE – TROUGH TO PEAK MOVE (%)

Source: SAPOA





The latest quarter saw an improvement in the vacancy rate of all office grades with the exception of prime offices which saw a marginal increase (Figure 4). The 50 basis point improvement in the overall vacancy rate was equally split with A, B & C grade each contributing roughly equally to the decline on a weighted basis.

As at quarter 4 2014, both A and B-grade offices recorded improvements of 40bps relative to a quarter before. A-grade offices ended the quarter with a vacancy rate of 9.6% while the B-grade vacancy rate remains higher at 12.8% and has been bouncing around in the 12-14% range since 2011.

Prime offices ended the quarter on a vacancy rate of 6.3% - 40bps up from 5.9% in the previous quarter. Unlet new developments continue to be the cause of the prime office vacancy rate moving higher. During the current quarter, 128,000sqm of new prime office

space came onto the market while only 116,00sqm was occupied during the quarter – in other words a negative net absorption of 12,000sqm.

Three nodes were responsible for virtually all of the increased vacancy in the prime office segment – Melrose, Lynnwood and Newtown.

After a turbulent 2013, the Sandton prime office market saw an encouraging take-up of space and ended the quarter with a vacancy rate of 6.7% - down from 13.6% in the first quarter of the year.

The pre-let rate of developments in the node should be watched though, as it slipped to 80% during the latest quarter – down from 85% in the previous quarter. However, several speculative developments are only coming to market more than 12 months from now leaving time to fill some of the available space.

Vacancy rate by Office Grade

FIGURE 4:VACANCY RATE BY OFFICE GRADE 1990-2014

Source: SAPOA





On a regional level, the lowest vacancy rate at quarter end was recorded for the City of Cape Town where an all-office vacancy rate of 9.2% was recorded – 30bps down from the previous quarter. A total of 26,400sqm was let during the quarter while 19,200sqm of new space came onto the market – a net absorption of ~7,200sqm.

On a nodal level, vacancy increases in Century City & Pinelands were more than offset by declines in Claremont & the Cape Town CBD.

The eThekwini Municipality’s office vacancy rate was recorded at 11.0% at quarter end – only slightly lower than the City of Tshwane’s 11.2% and the City of Joburg’s 11.4%. Despite an improvement in occupancy levels over the past quarter, the Nelson Mandela Bay Municipality continues to lag with a vacancy rate of 18.4%.

The Tshwane office market reported an aggregate increase in its vacancy rate of 40bps over the previous quarter. Much of the increase were as a result of unlet speculative development in the Highveld Technopark and extensions office node. Over 9,000sqm of newly vacant space in Arcadia also contributed to the increased vacancy rate in the region.

The eThekwini Municipality recorded a marginal 10bp improvement in its vacancy rate after a significant 3.1% decline in the previous quarter.

The City of Joburg’s office vacancy rate recorded a 100bp decline during the quarter. Nodes contributing the bulk of this improvement were Sandton, the CBD and Constantia Kloof. and Rosebank. This was partially offset by negative take-up in the Midrand and Melrose/Waverley nodes.

As was the case in the previous two cycles when vacancies were nearing peak levels, inner city office vacancies are significantly higher than that of city decentralized office nodes. In saying that, inner city vacancies are currently lower than it was in 2003 as a result of structural change brought about by the conversion of CBD offices to residential space.

During the quarter ending December 2014, the national inner city office vacancy rate improved to end at 14.9% while the country’s city decentralized nodes posted an aggregate vacancy rate of 9.7% - 50bps down from the previous quarter.

The current level of inner city office vacancies are largely driven by the Johannesburg and Durban CBDs where vacancy rates of 17.3% and 14.9% was recorded at quarter end.

The vacancy rate of offices in the inner cities of Cape Town and Pretoria are currently significantly lower at 13.4% and 10.2% respectively- but still above that of the average decentralized office node.

Regional Trend

Comparing CBD and Decentralised Results





Development activity, although slightly down on the quarter before, remained high at Q4 2014 with ~707,000sqm under development (Figure 5a). Expressed as a percentage of existing developments, development activity is currently at 4.2%. While this level is off the highs of 2006-’08 it is high given the level of available space currently available in the market and un-let new developments could weigh on asking rental growth in the short to medium term.

Development activity continues to get more concentrated with almost half of office development now taking place in Sandton and 78% of development concentrated in 10 nodes – highlighting the importance of nodal selection in the currently challenging office market.

In fact, in the 24 year history of the SAPOA OVS, development activity has only once been more concentrated. That being in 2008 when Gautrain-driven development in Sandton, Rosebank, Centurion, Midrand and Hatfield accounted for close on half of all office development. The only previous occasion where one node dominated development activity like Sandton is currently doing was in 1994 when the CBD of Johannesburg saw an unprecedented construction boom following the country’s first democratic elections.

While development activity has been trending up since 2010, the amount of speculative development has been trending down ever since the recession and is currently at levels last seen in 2003 (the peak of the previous vacancy cycle). Speculative development peaked in 2008 when only 22% of new developments were pre-let. (Figure 5b)

Office Development Activity

FIGURE 5A:DEVELOPMENT ACTIVITY: Q1 1990- Q4 2014

FIGURE 5B:DEVELOPMENT PRE-LET RATE: Q1 1990- Q4 2014

Source: SAPOA





Office Development Activity (cont)

FIGURE 6:DEVELOPMENT CONCENTRATION- INTER-QUARTILE SPREAD Q1 1990- Q4 2014

Source: SAPOA

POST-APARTHEID BOOMJoburg CBD boom following first democratic elections

GAUTRAIN DRIVEN ACTIVITY especially Sandton, Rosebank & Centurion

CORPORATE CONSOLIDATIONAlmost half of all development in Sandton

FLIGHT FROM INNER CITIESBuilding boom in several decentralised nodes

1

2

3

4





Despite the 50bp improvement recorded during the current quarter the office sector can still be seen as being in a slowdown phase because of increasing vacancies and slow rental growth. However, the different office grades find themselves at different phases of the cycle – especially at the top and bottom ends. (Figure 7)

The prime office segment has seemingly turned the corner after a challenging 12 month period, which saw a lot of un-let development space come onto the market. In contrast, the A-grade segment came under a lot of pressure over the past quarter. The B-grade vacancy rate has been stuck in the low double digits since 2011 while the decline in C-grade vacancies can be attributed to the

conversion of inner city office space to residential (as opposed to a shift in the demand/supply balance).

Currently, the total vacancy rate (including un-let new developments) are similar to 2005 levels but development activity is currently significantly higher (and still increasing). In the medium term this could impact negatively on landlord’s negotiating power, especially seen against a background of lower economic growth when comparing the current macroeconomic environment against that of 2004/’05 when real economic growth was above 5% for 14 straight quarters. On a nodal level, there is increasing variance in the vacancy rate and level of rental growth of the different nodes.

The Office Property Cycle

FIGURE 7:THE OFFICE PROPERTY CYCLE

Source: SAPOA





TOTAL RENTABLE AREA (M2)

AREA AVAILABLE

FOR LEASING (M2)

CURRENT%

PREVIOUS MONTHSGROSS ASKING

RENTALS - RAND/M2 TOTAL RENTABLE AREA (M2)

AREA AVAILABLE

FOR LEASING (M2)

MEDIAN ASKING RENTAL3

%

6

%

9

%MIN MAX MED

COMMITTED NEW DEVELOPMENTS

BEDFORDVIEW

A 139,500 7,124 5.1% 8.9% 9.4% 10.9% 100 120 115

B 69,794 11,157 16.0% 16.0% 14.7% 16.3% 85 110 95

C 13,650 420 3.1% 3.1% 34.7% 34.7% 95 95 95

TOTAL 222,944 18,701 8.4% 10.8% 13.3% 14.8%

BRAAMFONTEIN

A 226,121 43,760 19.4% 17.1% 16.1% 17.7% 63 95 83

B 139,838 7,974 5.7% 6.7% 13.4% 14.1% 60 69 60

C 98,516 1,308 1.3% 1.4% 1.3% 1.3% 50 50 50

TOTAL 464,475 53,042 11.4% 10.8% 12.1% 13.1%

BRUMA

A 30,164 1,006 3.3% 3.3% 5.1% 5.1% 74 80 77

B 58,104 10,571 18.2% 29.6% 31.9% 31.1% 74 110 75

C 6,000 2,460 41.0% 100.0% 75 75 75

TOTAL 94,268 14,037 14.9% 22.4% 21.3% 20.9%

BRYANSTON / EPSOM DOWNS

A 546,446 40,177 7.4% 7.5% 7.7% 6.9% 85 195 115

B 34,984 916 2.6% 5.9% 5.9% 3.1% 78 126 92

TOTAL 581,430 41,093 7.1% 7.4% 7.6% 6.7% 19,165 2,400 125

CBD JOHANNESBURG

A 612,166 17,853 2.9% 2.9% 0.0% 1.0% 110 110 110

B 885,603 180,685 20.4% 20.8% 21.4% 18.6% 25 110 75

C 416,940 132,939 31.9% 35.2% 32.9% 37.2% 25 85 50

TOTAL 1,914,709 331,477 17.3% 18.2% 17.7% 17.4% 40,000 40,000 120

CONSTANTIA KLOOF

A 312,795 14,653 4.7% 11.7% 11.7% 4.6% 78 140 110

B 21,743 2,641 12.1% 12.5% 11.9% 11.4% 60 95 90

TOTAL 334,538 17,294 5.2% 11.8% 11.7% 5.1%

FOURWAYS

P 10,000 - 0.0% 0.0% 0.0% 0.0%

A 143,241 23,300 16.3% 18.8% 14.6% 15.6% 75 188 113

B 6,500 - 0.0% 0.0% 0.0% 0.0%

TOTAL 159,741 23,300 14.6% 16.9% 13.1% 14.0% 10,800 1,490 140

CRESTA/BLACKHEATH TO RANDPARK

P 75,000 - 0.0% 0.0% 0.0% 0.0%

A 51,999 1,400 2.7% 2.7% 2.7% 2.7% 121 121 121

B 35,537 8,969 25.2% 12.2% 14.5% 19.8% 59 100 95

TOTAL 162,536 10,369 6.4% 3.5% 4.0% 5.2% 4,000 105

CITY OF JOHANNESBURG






AREA AVAILABLE

FOR LEASING (M2)

CURRENT%



AREA AVAILABLE

FOR LEASING (M2)


%

6

%

9

%MIN MAX MED


GREENSTONE

P 16,400 - 0.0% 0.0%

A 36,255 1,164 3.2% 3.2% 2.2% 4.9% 105 105 105

TOTAL 52,655 1,164 2.2% 2.2% 2.2% 4.9% 10,845 10,845 105

HOUGHTON/KILLARNEY

A 104,863 11,714 11.2% 6.9% 4.5% 3.8% 94 150 124

B 2,230 2,230 100.0% 100.0% 0.0% 70 70 70

TOTAL 107,093 13,944 13.0% 8.8% 4.5% 3.7% 6,425 6,425

HYDE PARK/DUNKELD

A 40,867 10,974 26.9% 17.7% 22.9% 20.4% 95 175 145

B 74,533 4,791 6.4% 6.7% 5.8% 6.7% 100 150 123

TOTAL 115,400 15,765 13.7% 10.2% 11.2% 11.6%

ILLOVO

P 10,300 - 0.0% 0.0% 0.0% 0.0%

A 166,024 17,774 10.7% 11.2% 10.6% 1.3% 130 225 140

B 27,164 1,572 5.8% 4.4% 5.7% 7.5% 115 150 130

C - -

TOTAL 203,488 19,346 9.5% 9.7% 9.4% 2.0% 8,800

MELROSE/WAVERLEY

P 116,000 10,296 8.9% 4.6% 4.7% 1.4%

A 33,878 200 0.6% 2.4% 3.5% 3.1% 173 173 173

B 16,697 437 2.6% 3.0% 3.0% 3.0% 115 115 115

C 3,000 634 21.1% 9.4% 80 80 80

TOTAL 169,575 11,567 6.8% 4.0% 4.2% 2.0% 5,430 5,430 160

MIDRAND

P 182,823 3,044 1.7% 1.8% 1.8% 1.8% 105 156 149

A 213,392 26,885 12.6% 6.3% 6.3% 6.3% 65 130 88

B 247,205 18,372 7.4% 9.9% 9.9% 9.9% 50 142 83

C 5,128 - 0.0% 10.2% 10.2% 10.2% 70 70 70

TOTAL 648,548 48,301 7.4% 6.5% 6.5% 6.5%

MORNINGSIDE

A 64,925 2,875 4.4% 6.5% 12.1% 1.7% 99 160 120

B 16,800 3,195 19.0% 13.1% 40.9% 40.9% 95 150 123

TOTAL 81,725 6,070 7.4% 6.9% 13.7% 4.2% 12,799 5,765 155

MILPARK

A 27,900 - 0.0% 0.0% 0.0% 0.0%

B 175,526 6,234 3.6% 3.7% 3.2% 5.3% 72 88 79

C 18,012 - 0.0% 0.0% 0.0% 0.0%

TOTAL 221,438 6,234 2.8% 2.9% 2.6% 4.2%







AREA AVAILABLE

FOR LEASING (M2)

CURRENT%



AREA AVAILABLE

FOR LEASING (M2)


%

6

%

9

%MIN MAX MED


PARKTOWN

A 116,791 3,091 2.6% 4.7% 4.8% 1.2% 100 140 110

B 223,265 24,868 11.1% 11.9% 11.7% 12.0% 81 125 96

C 17,970 3,477 19.3% 19.3% 17.9% 17.9% 60 90 75

TOTAL 358,026 31,436 8.8% 9.7% 9.8% 8.8%

NEWTOWN

P 30,000 2,500 8.3% 110 110 110

A 61,859 - 0.0% 0.0% 0.0% 0.0%

B 50,900 15,256 30.0% 43.7% 43.7% 42.5% 70 105 85

C 6,300 - 0.0% 0.0% 0.0% 0.0%

TOTAL 149,059 17,756 11.9% 18.7% 18.7% 18.2%

RANDBURG

A 54,667 3,437 6.3% 7.4% 8.7% 8.7% 85 86 86

B 340,769 41,732 12.2% 12.8% 10.1% 10.1% 55 100 70

C 22,400 3,440 15.4% 14.8% 27.0% 22.8% 45 80 69

TOTAL 417,836 48,609 11.6% 12.3% 11.2% 10.9% 33,500 1,500 110

RIVONIA

A 83,391 12,655 15.2% 15.2% 15.3% 18.3% 67 120 90

B 192,603 41,805 21.7% 21.7% 21.8% 20.1% 65 105 95

C 5,834 - 0.0% 0.0% 0.0% 0.0%

TOTAL 281,828 54,460 19.3% 19.3% 19.5% 19.2% 11,579 4,579

ROSEBANK

P 67,000 - 0.0% 0.0%

A 139,511 15,225 10.9% 9.1% 4.0% 2.8% 88 215 160

B 166,891 18,975 11.4% 11.7% 5.5% 2.8% 85 130 116

C 13,582 - 0.0% 0.0% 0.0% 0.0%

TOTAL 386,984 34,200 8.8% 8.3% 4.4% 2.7% 22,294 3,519

SANDTON

P 505,571 33,646 6.7% 7.5% 12.7% 13.6% 169 216 195

A 771,577 128,171 16.6% 20.7% 15.8% 17.1% 95 210 143

B 227,407 17,930 7.9% 7.4% 5.0% 5.0% 75 175 100

TOTAL 1,504,555 179,747 11.9% 14.8% 13.2% 14.2% 333,000 64,000 200

SUNNINGHILL

A 222,527 25,142 11.3% 12.0% 12.2% 11.3% 75 3,556 90

B 126,849 2,405 1.9% 1.9% 100 100 100

TOTAL 349,376 27,547 7.9% 8.3% 12.2% 11.3% 23,191 23,191 108

WATERFALL

A 38,287 - 0.0%

TOTAL 38,287 - 0.0% 28,792

WOODMEAD

A 398,029 36,341 9.1% 10.1% 4.5% 4.8% 88 135 113

B 17,800 5,063 28.4% 28.4% 28.4% 28.4% 88 88 88

TOTAL 415,829 41,404 10.0% 11.0% 5.6% 5.9%







AREA AVAILABLE

FOR LEASING (M2)

CURRENT%



AREA AVAILABLE

FOR LEASING (M2)


%

6

%

9

%MIN MAX MED


BELLVILLE

A 369,763 19,018 5.1% 5.7% 6.6% 7.6% 85 130 100

B 163,941 20,466 12.5% 11.1% 11.1% 10.2% 70 100 86

C 24,081 6,850 28.4% 29.2% 28.3% 29.2% 40 85 61

TOTAL 557,785 46,334 8.3% 8.4% 9.0% 9.4% 10,000 2,500

CENTURY CITY

P 16,600 - 0.0% 0.0% 0.0% 0.0%

A 229,094 18,156 7.9% 6.6% 6.0% 7.5% 100 145 125

B 39,563 2,182 5.5% 0.8% 0.2% 2.9% 100 110 100

TOTAL 285,257 20,338 7.1% 5.6% 5.0% 6.5% 23,000 23,000

CBD CAPE TOWN

P 52,000 19,000 36.5% 36.5% 36.5% 185 185 185

A 311,954 33,008 10.6% 10.0% 7.2% 6.7% 85 165 118

B 515,535 53,862 10.4% 10.2% 11.9% 11.8% 80 115 95

C 145,178 31,711 21.8% 26.3% 26.4% 31.9% 47 95 75

TOTAL 1,024,667 137,581 13.4% 13.7% 13.9% 14.4% 17,000 5,000

CLAREMONT

A 50,036 550 1.1% 1.7% 1.7% 0.8% 140 140 140

B 54,586 414 0.8% 12.1% 14.1% 15.4% 115 130 123

C 8,432 1,235 14.6% 29.2% 30.0% 31.5% 40 95 65

TOTAL 113,054 2,199 1.9% 8.8% 9.8% 10.1%

PINELANDS

A 194,475 3,185 1.6% 1.6% 1.3% 1.3% 110 130 130

B 33,950 2,182 6.4% 12.0% 13.9% 13.9% 85 100 93

TOTAL 228,425 5,367 2.3% 3.2% 3.2% 3.2% 6,500

RONDEBOSCH/NEWLANDS

A 70,254 5,496 7.8% 8.2% 9.2% 10.0% 145 145 145

B 28,077 1,169 4.2% 2.5% 1.3% 1.9% 115 125 120

TOTAL 98,331 6,665 6.8% 6.6% 7.0% 7.7%

WATERFRONT

P 18,000 - 0.0% 0.0% 0.0% 0.0%

A 65,055 1,361 2.1% 0.9% 1.5% 1.8% 165 165 165

B 6,298 - 0.0% 0.0% 0.0% 0.0%

TOTAL 89,353 1,361 1.5% 0.6% 1.1% 1.3% 4,000 4,000 185

CITY OF CAPE TOWN






AREA AVAILABLE

FOR LEASING (M2)

CURRENT%



AREA AVAILABLE

FOR LEASING (M2)


%

6

%

9

%MIN MAX MED


BALLITO

P 3,632 - 0.0% 0.0% 0.0% 0.0%

A 17,040 2,453 14.4% 12.4% 15.0% 14.7% 70 143 90

B 7,796 292 3.7% 4.2% 7.0% 7.3% 60 100 70

C 14,411 1,017 7.1% 15.0% 19.1% 19.8% 50 75 65

TOTAL 42,879 3,762 8.8% 10.8% 13.7% 13.9% 21,500

CBD DURBAN

A 163,562 32,800 20.1% 20.1% 20.1% 20.1% 60 75 70

B 179,757 15,300 8.5% 8.5% 12.8% 12.8% 50 85 55

C 385,019 60,656 15.8% 16.2% 24.5% 24.5% 25 75 51

TOTAL 728,338 108,756 14.9% 15.1% 20.5% 20.5%

BEREA

A 43,152 2,454 5.7% 7.3% 8.2% 7.9% 90 130 113

B 33,303 8,553 25.7% 25.7% 25.7% 20.0% 65 130 95

C 17,653 4,100 23.2% 23.2% 23.2% 20.2% 65 95 85

TOTAL 94,108 15,107 16.1% 17.1% 17.5% 14.7%

HILLCREST/GILLITS

P 5,467 371 6.8% 9.2% 7.6% 5.2% 75 105 100

A 17,348 791 4.6% 5.7% 0.3% 0.3% 85 160 105

B 6,402 515 8.0% 2.7% 3.7% 3.7% 80 85 83

C 879 - 0.0% 0.0% 56.9% 56.9% 80 80 80

TOTAL 30,096 1,677 5.6% 5.5% 4.1% 3.7%

UMHLANGA/LA LUCIA

P 4,706 100 2.1% 2.1% 2.1% 2.1% 85 85 85

A 242,610 7,183 3.0% 3.0% 3.0% 3.0% 90 135 135

B 25,752 954 3.7% 3.7% 3.3% 3.3% 100 100 100

TOTAL 273,068 8,237 3.0% 3.0% 3.0% 3.0% 2,500 2,500 145

WESTVILLE

A 37,295 2,005 5.4% 6.7% 6.4% 4.2% 110 140 125

B 140,847 8,102 5.8% 4.9% 5.6% 4.4% 85 130 110

TOTAL 178,142 10,107 5.7% 5.7% 6.0% 4.3% 14,000 10,000

ETHEKWINI MUNICIPALITY






AREA AVAILABLE

FOR LEASING (M2)

CURRENT%



AREA AVAILABLE

FOR LEASING (M2)


%

6

%

9

%MIN MAX MED


ARCADIA

A 156,550 16,111 10.3% 5.4% 4.8% 6.0% 88 90 89

B 93,540 7,200 7.7% 6.5% 6.5% 3.6% 65 90 80

C 115,750 836 0.7% 0.4% 0.4% 0.4% 85 85 85

TOTAL 365,840 24,147 6.6% 4.1% 3.8% 3.6%

CBD PRETORIA

A 134,580 1,789 1.3% 1.3% 1.3% 1.8% 65 65 65

B 275,052 54,119 19.7% 19.7% 17.8% 13.7% 60 100 80

C 210,300 7,027 3.3% 6.4% 6.4% 6.3% 50 80 65

TOTAL 619,932 62,935 10.2% 11.2% 10.4% 9.2%

LYNNWOOD/MENLO PARK/PERSEQUOR PARK/HAZEL WOOD

P 44,616 5,037 11.3% 0.0% 0.0% 0.0% 166 166 166

A 74,271 6,853 9.2% 9.2% 9.2% 7.7% 116 145 128

B 102,690 6,919 6.7% 5.4% 4.5% 5.1% 80 105 85

C 13,800 - 0.0% 0.0%

TOTAL 235,377 18,809 8.0% 5.6% 5.5% 5.3% 800

MENLYN/FAERIE GLEN/ASHLEA GARDENS

A 230,120 25,831 11.2% 11.0% 10.8% 6.7% 115 161 130

B 117,320 10,554 9.0% 7.5% 9.1% 7.4% 90 120 107

C 6,050 45 0.7% 0.7% 0.7% 1.9% 75 75 75

TOTAL 353,490 36,430 10.3% 9.7% 10.1% 6.9% 2,080

BROOKLYN/NIEUW MUCKLENEUK/GROENKLOOF/WATERKLOOF

A 179,780 13,277 7.4% 9.2% 9.9% 7.3% 105 175 141

B 64,724 3,763 5.8% 5.8% 4.2% 4.6% 100 125 118

TOTAL 244,504 17,040 7.0% 8.3% 8.2% 6.7% 6,800 155

CENTURION CBD

A 201,820 18,932 9.4% 9.8% 10.3% 7.6% 100 136 125

B 224,130 44,328 19.8% 19.8% 21.3% 21.9% 70 120 98

TOTAL 425,950 63,260 14.9% 15.1% 16.2% 15.0% 12,860 5,860 156

HATFIELD/HILLCREST

A 118,330 11,710 9.9% 9.9% 11.1% 8.5% 102 174 120

B 156,690 23,640 15.1% 12.7% 13.3% 9.5% 68 128 95

TOTAL 275,020 35,350 12.9% 11.5% 12.3% 9.0%

HIGHVELD TECHNOPARK & EXTENSIONS

A 422,034 91,320 21.6% 21.5% 8.4% 14.6% 90 167 110

B 141,280 15,611 11.0% 12.0% 11.7% 12.2% 65 95 85

TOTAL 563,314 106,931 19.0% 19.2% 9.3% 13.9% 20,000 20,000 125

CITY OF TSHWANE


AREA AVAILABLE

FOR LEASING (M2)

CURRENT%



AREA AVAILABLE

FOR LEASING (M2)


%

6

%

9

%MIN MAX MED






CENTRAL/PARK DRIVE

B 8,541 2,587 30.3% 30.3% 31.1% 30.3% 80 103 92

TOTAL 8,541 2,587 30.3% 30.3% 31.1% 30.3%

GREENACRES

P 3,545 - 0.0% 0.0% 0.0% 0.0% 130 135 133

A 9,753 300 3.1% 3.1% 1.7% 1.7% 90 125 103

B 53,056 11,874 22.4% 23.8% 18.8% 18.1% 75 100 75

C 747 - 0.0% 0.0% 0.0% 0.0% 65 65 65

TOTAL 67,101 12,174 18.1% 19.3% 15.1% 14.6% 3,015 3,015 135

NEWTON PARK

P 16,621 800 4.8% 4.8% 4.8% 4.8% 135 136 136

A 967 - 0.0% 0.0% 0.0% 0.0% 95 95 95

B 3,514 1,177 33.5% 33.5% 33.5% 33.5% 70 75 73

TOTAL 21,102 1,977 9.4% 9.4% 9.4% 9.4%

WALMER/FAIRVIEW

A 20,007 5,110 25.5% 25.5% 25.5% 25.5% 95 120 100

B 5,471 660 12.1% 13.2% 24.7% 13.5% 67 75 70

TOTAL 25,478 5,770 22.6% 22.9% 25.4% 23.0% 7,965 7,965 140

NELSON MANDELA BAY MUNICIPALITY

CITY OF TSHWANE

PTA EASTERN SUBURBS/ ROUTE 21

A 154,402 11,818 7.7% 8.8% 10.3% 12.0% 74 140 100

B 139,550 16,967 12.2% 12.0% 12.1% 12.1% 80 162 102

C 24,830 988 4.0% 3.6% 3.6% 8.8% 72 100 86

TOTAL 318,782 29,773 9.3% 9.8% 10.5% 11.8% 2,500

SUNNYSIDE

C 72,700 948 1.3% 1.3% 1.4% 2.0% 65 75 70

TOTAL 72,700 948 1.3% 1.3% 1.4% 2.0%

SILVER LAKES/ THE WILLOWS

A 78,330 2,431 3.1% 2.0% 7.1% 5.8% 87 145 115

C 3,000 - 0.0% 0.0% 7.2% 7.2%

TOTAL 81,330 2,431 3.0% 1.9% 7.1% 5.8% 10,700 8,200 135





NOTES TO THE SAPOA OFFICE VACANCY Please note that the total rentable areas will change from time to time as new and revamped buildings come on stream. The Survey is dynamic and data will change as buildings are completed and are up- or down-graded.

Panelists continue to classify buildings more accurately and, in some areas, the values in the various grades have changed since the last survey.

The statistics only reflect actual occupation even though major leases may have been signed. The results are aggregated from data provided by individual buildings and the methodology ensures that there is no duplication of data .

Note: In general sublet activity does not form part of the official vacancy rate and this may impact on the actual space available in the market. The effect of sublet space may be more or less prominent depending on the prevailing market conditions.

SAPOA endeavours to ensure that all information published in this survey is as accurate as possible and SAPOA cannot be responsible for errors, omissions or interpretations thereof.

DEFINITIONS 1. OFFICE BUILDING GRADES

1.1 Grade P: Top quality, modern space which is generally a pace-setter in establishing rentals and which includes the latest or a recent generation of building services, ample parking, a prestige lobby finish and good views, or a good environment.

1.2 Grade A: Generally not older than fifteen years or which has had a major renovation; high quality modern finishes; air conditioning; adequate on-site parking, market rental near the top of the range in the metropolitan area in which the building is located. (The following should also be taken into account in determining whether the building is A-grade or not: consider whether the building has a good quality lobby finish, quality access to/from an attractive St environment and other similar factors, such as safety and security).

1.3 Grade B: Generally older buildings, but accommodation and finishes close to modern standards as a result of refurbishments and renovation from time to time, air-conditioned; on-site parking, unless special circumstance pertain.

1.4 Grade C: Buildings with older style finishes, services and building systems. It may or may not be air-conditioned or have on-site parking.

2. RENTABLE AREA

All areas referred to in this survey are rentable areas in conformity with the definition of rentable areas as set out in the SAPOA Method of Measuring Floor Areas in Commercial and Industrial Buildings. Essentially this covers the entire floor, excluding major vertical penetrations of the floor such as stairs, lift shaft, flues, pipe shafts and vertical ducts which serve more than one floor of the building. It includes additional services such as stairs, dumb waiters and lifts which exclusively serve a tenant occupying offices on more than one floor.

3. GROSS ASKING RENTAL

The full rental being asked including operating costs and municipal costs excluding parking, VAT, electricity/water consumption and internal cleaning.

AREA DESCRIPTIONS


BEDFORDVIEW / BRUMA: Includes the offices around and adjacent Bruma Lake, Eastgate Shopping Centre and Bedford Shopping Centre. Also offices adjacent to Gillooly’s Farm, Skeen Boulevard as well as along the R22 and R24 in the direction of OR Tambo International Airport.

BRAAMFONTEIN: Bounded by the M1 highway to the west, the railway line to the south, Joubert St to the east and the Braamfontein Ridge to the north including the Braampark development but excluding the University campus.

BRYANSTON / EPSOM DOWNS: This area adjacent to the intersection between the Western Bypass and William Nicol Dr, including Peter Place.

CBD JOHANNESBURG: Bounded by the M2 and M1 highways to the south and west respectively, the railway to the north and End St to the east.

CONSTANTIA KLOOF BASIN: Includes area either side of Hendrik Potgieter Road, including Monash University to the west with the Western bypass to the east.

CRESTA / BLACKHEATH: Includes offices in Cresta, Darrenwood, Blackheath and Northcliff & extensions and Randpark either side of Beyers Naude bounded by Milner Rd to the east and Christiaan de Wet/Northumberland to the west, and from Milner in the south up to the N1 in the north.





FOURWAYS: Bounded by Uranium Rd to the north, Main Rd to the east, William Nicol intersection to the south and Waterford Estate to the west.

GREENSTONE / LONGMEADOW / MODDERFONTEIN / EDENVALE: Bounded by the N3 to the west, Peace St/Modderfontein Rd to the north, Palliser Rd to the east and Aitken Rd to the south.

HOUGHTON / KILLARNEY: Included are the offices in Killarney and Houghton on either side of the M1 highway as well as the Houghton Isle development.

HYDE PARK / DUNKELD: The node of the intersection of Jan Smuts Ave and William Nicol Dr including Dunkeld West, Hyde Park and the upper part of Craighall Park.

ILLOVO: The office node in Rudd Rd, Oxford Rd and Illovo Boulevard areas.

MELROSE / WAVERLEY: The area enclosed by Corlett Dr, Oxford Rd, Glenhove Rd and Atholl-Oaklands/Scott St as well as the Waverley area across the M1 Highway.

MIDRAND: Includes buildings which are predominantly offices in the Midrand and Halfway House area.

MILPARK: Includes the Richmond/Sunnyside office development node, the Milpark developments west of Empire Rd, the SABC complex and surrounding offices.

MORNINGSIDE: Includes Morningside, Morningside Manor & Gallo Manor areas bounded by Kelvin Dr, Bowling Rd, South Rd and the Western Service Rd/M1.

NEWTOWN: Includes the area enclosed by Commissioner, West, Car and Queen Streets.

PARKTOWN: Includes the Parktown nodes adjacent to Jan Smuts Ave up to the ridge, Central Parktown and the office area around Anerley Rd and Sunnyside Park Hotel.

RANDBURG: The Randburg CBD and extending into Ferndale, north to Bond St, west to Malibongwe Dr and east along Bram Fischer Dr into Jan Smuts Ave adjoining Bordeaux, up to Republic Rd. Also continuing south along both sides of Bram Fischer until Conrad Dr in Blairgowrie.

RANDPARK/RANDPARK RIDGE: Bounded by N1 to the south, Randpark Ridge to the west, Boskruin/Bromhof to the east and Christiaan de Wet/Northumberland to the north.

RIVONIA: The office node along Rivonia Rd up to 12th Ave, bounded by Summit Rd to the west, Bowling Rd to the east and Cullinan Place to the south.

ROSEBANK: Bounded by Bolton Rd, Jan Smuts Ave, Oxford Rd and Jellicoe Ave, including sundry buildings in Parkwood and Parktown North along the major arterial Rds.

SANDTON AND ENVIRONS: The Sandton CBD & adjacent office nodes incl. Wierda Valley, Benmore & Sandown. Also included are the offices along Katherine Rd travelling towards the M1 highway.

SUNNINGHILL: Centrally contained in the well-defined commercial hub. The North boundary is the main residential portion of the suburb. The East boundary terminates at Woodmead Dr. The Southern boundary is all properties that are accessed directly from Witkoppen Rd until it intersects with Millcliff Rd which then provides its Western boundary. The exclusion in terms of commercial buildings are the small, owner occupied properties that were constructed at the northern end of Peltier Rd.

WOODMEAD: The node is contained by the M1 highway to the East, Maxwell Dr to the North and Kelvin Dr to the South. The bulk of the commercial buildings are located in the office parks located directly to the West of Woodmead Dr, up to and including those on the Country Club Johannesburg boundary.

WATERFALL: All the office developments located within the confines of the Waterfall Business Estate.Generally described by the area bounded by Allandale Rd to the north, Woodmead Dr to the west and the N1 highway to the east.Maxwell Dr serves as the border to the west and south. Excludes Megawatt Park and the Woodmead North offices.

CITY OF CAPE TOWN

BELLVILLE: Jip de Jager/Mike Pienaar to the West, Voortrekker Rd to the South, Old Oak to the East and Van Riebeeck Rd to the North.

CBD CAPE TOWN: Chiappini St to West, Gardens suburb to South, Tennant St to East and Harbour Freeway to North.

CLAREMONT: Highwick/Pine to the South, Protea/Campground Rd to the North, Palmyra to the East and the M3 to the West.

PINELANDS: Settlers Way to the South, Jan Smuts to the North and East and Old Mill Rd to the West.

RONDEBOSCH / NEWLANDS: Protea/Campground Rd to the South, Woolsack Rd to the North, Campground Rd to the East and the M3 to the West.

WATERFRONT / CENTURY CITY: Self explanatory.





ETHEKWINI MUNICIPALITY

BALLITO: The main area of Ballito and surrounds, including Salt Rock.

CBD DURBAN: The area bounded by Victoria Embankment and Winder St to the south, the railway line, Cross St, First Ave and Stamford Hill Rd to the west, Argyle Rd to the north and Brickhill and Point Rds to the east.

DURBAN SUBURBS: Includes Berea, Umhlanga / La Lucia and Westville.

HILLCREST: A triangular shape bounded by King Cetshwayo Highway (M13) in the south, Kassier Rd to the west and a line from the intersection of Kassier Rd & the R103 (Main Rd) to the intersection of King Cetshwayo Highway (M13) in the north east. The survey has been extended to cover Gillitts in Q3 2011 and Kloof will be introduced in due course.

CITY OF TSHWANE

ARCADIA: Bounded by Du Toit St to the west, Hill St to the east, Schoeman and Park Sts to the south and Belvedere St to the north.

BROOKLYN/ NIEUW MUCKLENEUK/ GROENKLOOF/WATERKLOOF: Bounded by the Fountains Circle, Lynnwood Rd, Brooklyn Rd, Dely Rd, Rigel Rd North and Sibelius St.

CBD PRETORIA: Is bounded by Potgieter St to the west, Boom St to the north, Scheiding St to the south and Du Toit / Van Boeshoten St to the east.

CENTURION CBD: Is bounded by John Vorster extension and Rabie Street to the west, Botha Avenue to the north and east and Alexandra Road and the N1 highway to the south.

HATFIELD / HILLCREST: Is bounded by Church St to the north, Duncan and Brooklyn Sts to the east, Festival St to the west and Lynnwood St to the south.

HIGHVELD TECHNOPARK / HIGHVELD EXTENSIONS: This area is bounded by the N1 highway to the north, Jean Avenue extension to the east, Nellmapius Drive to the south and the Ben Schoeman highway to the west.

LYNNWOOD/MENLO PARK/HAZELWOOD/PERSEQUOR PARK: Bounded by Brooklyn Rd to the west, the N4 Freeway to the north, General Louis Botha to the east and Garsfontein Rd to the south.

MENLYN / FAERIE GLEN / ASHLEA GARDENS: Bounded by Dely Rd to the west, Ingersol and Kelvin Sts to the north, General Louis Botha to the east and Garsfontein Rd to the south.

PRETORIA OTHER EASTERN SUBURBS / ROUTE 21: Comprises of small office nodes throughout the eastern suburbs of Pretoria which fall outside the boundries of all the other suburban nodes a wel as office developments along the R21 corridor.

THE WILLOWS / SILVER LAKES / TIJGER VALLEY: The area east of Lynnwood Ridge all along Lynnwood Road and extension passing through The Willows past Silver Lakes and extending to the Lombardy Office Park.

SUNNYSIDE: Is bounded by Park St to the north, Johnston St to the east, Walker St to the south and Du Toit / Van Boeshoten to the west.

NELSON MANDELA BAY MUNICIPALITY

CENTRAL/PARK DRIVE: The area bounded by Rink St to the East, Park Dr/Cape Rd to the South, Mount Rd to the west and Westbourne Rd to the North.

GREENACRES: The area bounded by Koningham Rd to the East, Westview Dr to the South, 2nd Ave to the West and Norvic Dr/Worricker St to the North.

NEWTON PARK: The area bounded by 2nd Ave to the East, Hurd St to the South, 7th Ave and to the West and King Edward St to the North.

WALMER/FAIRVIEW: The area bounded by 1st Ave to the East, Heugh Rd to the South, William Moffett Expressway and 17th Ave to the West and Main Rd to the North.





Statistics were provided by the following member companies:

Documents

OfficeVacancy - SAPOA · Q4: 2014 DECEMBER 2014 SAPOA CONTACT DETAILS T: 011 883 0679 F: 011 883 0684 Email: [email protected] Web: 1 The South African macroeconomic environment