While the Cape Town Central City has seen a number of primarily C-grade buildings converted from commercial use to residential in the past few years, the demand for premium-grade space continues to be in demand in the CBD.
This is according to figures released in the latest investment guide produced annually by the Cape Town Central City Improvement District (CCID), The State of Cape Town Central City Report – 2018: A year in review.
The vacancy rate in Premium grade has dropped year-on-year from 10.6% (in Q4, 2017) to 6.8% in 2018 (Q4). The figures contained in the report have been sourced from the South African Property Owners Association’s own quarterly 2018 Office Vacancy Report.
Notes Rob Kane, chairperson of the CCID: “The CCID’s investment guide lists 39 developments in the Cape Town Central City, ranging from those that opened their doors in 2018 or are currently under construction to those still in planning stages. Of these, at least 13 – nearly one third – are dedicated commercial buildings with retail planned at ground-floor level.
“This shows continuing confidence in the commercial property market in the CBD – an important market for private sector developers to nurture as any vibrant downtown area is reliant on a steady mix between commercial, retail and residential buildings.”
While Cape Town as a city still continues to record the lowest office vacancy rate overall among the five largest metropolitan municipalities across the country, the report does note that there has been an increase year-on-year in the average vacancy rate across all grades in the Central City, from 9.9% (Q4) in 2017 to 11.8% (Q4) in 2018. Total commercial space in the Central City currently stands at 1 062 023m2, an overall increase on 1 048 023m2 from 2017.
A significant reason behind this has, however, been the result of 30 000m2 of new office space coming on to the market.
New developments include 16 000m2 of office space at FWJK’s The Halyard building. Around 6 500m2 of space has also come available at the ENS building, and 3 000m2 has become vacant as a result of the upgrade of the Maserati building. All of these buildings lie in the Foreshore precinct within the CCID’s footprint.
Of the 39 developments referred to in the report, completed projects are currently valued at R2.798bn, developments under construction are valued at R1.747bn, planned projects equate to around R4,296bn, and proposals on the table are estimated to be around R4.740bn.
“While these collectively come to an estimated value of in excess of R13.5 billion, we always use the word ‘conservative’ when quoting the numbers,” stresses Kane, “as not all the values of developments currently on the go are reported in the public domain. We therefore know that the final figure will be somewhat higher than this, once all buildings have been completed.
Whatever the final numbers will reveal, they will nevertheless significantly boost the latest (2018/19) official City of Cape Town municipal valuation of property in the Central City to well beyond the current R42.861bn.
However, notes Kane: “The overall value of properties is likely to change with the adjudication of objections in the City of Cape Town’s current round of updating the General Valuation roll. But, we are still extremely heartened by the continuing confidence that investors are showing in the growth potential of the Central City.”
The report also outlines new trends in commercial office space, the most significant being the rise in co-working spaces within the CBD, with the locations and contact details of 17 of these appearing in the publication.
“The idea of flexible working space is huge overseas and local property developers are now really sitting up and taking notice of this trend,” says Kane. “Even large commercial players such as Growthpoint, Redefine and Investec Property are starting to offer offices-on-demand or shared space in key business hubs. It is, increasingly, becoming the new way to work.”
Issued by Irvine Partners on behalf of Sharon Sorour-Morris, Communications Manager: Cape Town CCID
FOR ALL MEDIA ENQUIRIES AND TO REQUEST INTERVIEWS:
Sharon Sorour-Morris
Manager: Communications
Central City Improvement District
sharon@capetownccid.org
082 216 0835