Rosebank and Waterfall surpass Sandton in office construction activity

SA’s ‘richest square mile’ has been overtaken but still has an oversupply of space, according to the Rode Report.
The Oxford Parks mega-development in pricey Rosebank. Image: Supplied

The financial hub of Sandton has been home to the highest level of new office development in the country for several years, but is seeing a significant slowdown in office space under construction.

This is according to the latest Rode Report on the South African Property Market (Q4, 2019), which points out that Rosebank and Waterfall have surpassed Sandton in terms of the amount of office space under construction.

Read: Exclusive: Growthpoint’s ambitious Sandton Summit plan

Published by Cape Town-based property economists Rode & Associates, the report uses data from the South African Property Owners Association to compile part of its quarterly study.

“Developments under construction [in Sandton] have slowed substantially, totalling only about 55 000m² in the third quarter of 2019 – a far cry from the peak of 371 000m² at the end of 2015,” the report notes.

Rosebank is booming

In comparison, Rosebank boasts the highest level of new office space under construction at 72 855m², while Gauteng’s new Waterfall node driven by JSE-listed Attacq claims second spot with 63 022m² of office space under development.

Read: Rosebank development secures Joburg’s first Radisson Red hotel

This means that almost 60% of office space under construction in SA is currently in Gauteng – 22.7% in Rosebank, 19.7% in Waterfall and 17% in Sandton.

Notably, Moneyweb reported last year that Rosebank is SA’s priciest office node.

And according to the Rode Report, it still is, with average grade A+ (premium grade) office market rentals of around R245 per square metre.

Read: Rosebank is SA’s priciest office node, report shows

While Sandton is still SA’s largest office node by far, major development in the area in recent years has contributed to an oversupply of office space. The report says office property vacancies in Sandton is still in the double digits.

“Sandton’s average vacancy rate decreased compared to the second quarter [of 2019], but remained high at about 17%,” the report notes.

Read: Office vacancies a ‘big risk’ for listed property

However, it points out that the substantial slowdown in office developments under construction in Sandton is “a positive factor”. It reports that about half of this space was pre-let as at the third quarter.

On the overall property market, the report notes that the office sector “remains worst placed of all the property types due to its significant oversupply, with vacancy rates staying at elevated levels”. It adds that for landlords, a positive is that office space under construction is at its lowest since the end of 2005, while building plans passed are falling sharply.

Read: SA office property development activity falls to 14-year low

Commenting in the report, Kobus Lamprecht, head of research at Rode & Associates, says: “The office market is still battling to record significant rental growth, with nominal rentals even declining in some nodes. Vacancy rates remain at elevated levels and it is difficult to see the situation turning around any time soon, given the general economic malaise.”

He adds: “Nationally, nominal market rentals for Grade A office space grew by 4% in the fourth quarter of 2019 compared to the fourth quarter of 2018, according to Rode’s office market survey. This is in line with the 4% growth recorded in the third quarter of 2019 [and] implies that rentals continued to decline in real terms, after accounting for building-cost inflation of about 6%. The last time rentals beat inflation was three years ago.”

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Taxis make travelling everywhere hell but around the Sandton CBD their lawlessness slows down the entire road system and makes Sandton a poor destination jut like they did with the Jo’burg CBD. As usual the authorities are nowhere to be seen. A country cannot have law and order when one of its key industries is allowed to be a reckless, lawless, violent killing-machine.

It’s not only in Sandton. It’s here in Pretoria as well. Taxi’s don’t EVER stop at red lights,they never ever use an indicator, they cut in traffic and drive in the oncoming lanes causing chaos. Sure, they do SA a great service by providing a means of transport to those that cannot afford cars and reduce the number of vehicles on the road by ride-sharing, but their behaviour is unacceptable.

It’s not even only the taxis. Sandton is extremely congested and a nightmare to reach from all directions – the N1 North and South is a giant parking lot in the mornings and afternoons, and even getting out of Sandton itself is often a 45 minute exercise. I used to commute to Sandton from Pretoria, and actually took a pay cut when I moved jobs, because I could not face spending 3 hours every day stuck in traffic.

The Taxi Industry took over the mantle of the industry with the most fatalities by far many years back. It is an industry that is owned by thugs and managed like thugs with no regard for the law or for life.

Is this an article about the taxi industry, or office construction activity?

Too bad the vacancy rates are increasing

End of comments.

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