Sandton office space rentals at critical tipping point?
WIth over 2,000,000msq of office space to let in the greater Sandton node, this suburb dominates headlines and can be seen as a leader in setting office space rental trends. However, recently vacancies are sittting at about 19% (depending on who you ask of course), perhaps indicating that the once sought after suburb is not the Bell of the Ball anymore.
When looking a little closer at the numbers, the massive new developments that have speckled the skyline have had a direct impact on the vacancies being the highest in the last 15 years. These sparkly new developments have sucked up a great deal of the A and B grade office space tenants, who would like to stay in Sandton but simply upgrade their work address. This leaves a glut of vacant space in the wake, where listed property owners have to come up with a new angle to make things work e.g. resi conversions, redevlopments, additional bulk, mixed use conversions and revamps.
So, where does this leave office space rentals in Sandton? Under pressure is the correct answer. And potentially without a light at the end of the proverbial tunnel. There are a number of tenant and broker incentives that are being offered by Listed property funds, however, this simply can't change the economy and the direct impact that this is having on one of our major office space nodes in Johannesburg. No demand and an oversupply of office space, puts pressure on rentals, creates a tenant dominated market and takes a bit of fancy footwork from funds in order to retain existing tenants. Leases are currently being restructured with existing tenants with lagre incentives.
There is already negaitve sentiment wherever you go in the listed property sector, and if the average Joe in the street knew the types of leases being signed, they would understand the rocky nature of the house of cards called Sandton office space.
Call Ash Brook on 0861 6222 62 to 1) Restructure your office lease and save you money 2) Find new office space to let