Almost a fifth of offices in Rosebank and in parts of Durban and Tshwane are now standing empty

Business Insider SA

Almost 20% of the office space in the Durban CBD, Rosebank and Hatfield in Tshwane stood empty in the last quarter of 2019, a new report by the South African Property Owners’ Association (Sapoa) shows.

Also, vacancy rates in Sandton, Sunninghill, Illovo and Midrand remain close to multi-year highs.

"Rosebank in particular has seen its vacancy rates spike as speculative developments come to market,” Sapoa said in the report. During the final quarter of 2019, Rosebank saw a 10% increase in its vacancy rate, which reached 17.9%.

"The node has seen several speculative developments come to market - many with significant vacancies," Sapoa said. The Melrose and Waverley area also saw a big increase in its vacancy rate, taking it to 9.1%.

Source: SAPOA

The Hatfield and Hillcrest node in Pretoria saw its office vacancy rate above 20% for the first time since 1994.

But there are some areas in Tshwane that are still seeing strong demand:

Source: SAPOA

In the Pretoria central business district 92% of buildings were fully occupied, possibly thanks to a larger government office presence, Sapoa said.

Of the major office nodes, Braamfontein had the highest percentage of empty buildings at 11%. “(This could) possibly presenting an attractive entry point for developers eyeing student residential conversions," the organisation said in a report.

As at the fourth quarter of 2019, 66 out of every 100 offices were fully let in South Africa, while only three were completely empty, the report shows.

The national office vacancy rate was 11% - marginally up on the quarter, while asking rentals was 2.5% higher than the year before. This is below the official inflation rate of 4%.

The City of Cape Town still had the lowest overall office vacancy rate at 7.3%.

Source: SAPOA

The City of Johannesburg saw a 12.5% vacancy rate.

The highest vacancy rate among the larger metros was the eThekwini municipality, with 13.8%. The office vacancy rate in the Durban CBD reached 18.2%, while Sapoa also noted a relatively large increase in Umhlanga’s overall vacancy rate.

Source: SAPOA

Given economic headwinds and structural growth constraints such as electricity supply, it is becoming increasingly hard to imagine the national office vacancy rate returning to mid-single digits within the next three years, says Sapoa.

It also notes that office developments have slowed to the weakest rate since 2006 – it has halved in the last 18 months, with only 247,000 square metres under construction.

But the pre-let rate of current developments ticked up to 60%, above the long-term average of 52%.

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