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Cape Town - The office market is continuing on its gradual recovery path as occupancy rates stabilise in the low double digits, according to the Sapoa Office Vacancy Report April 2014.
As at the first quarter of 2014, the national office vacancy rate as measured by Sapoa (South African Property Owners Association) stood at 11.0%.
While this is 20 basis points (bps) down from the quarter before, it is still up 40bps up from a year ago.
The national office vacancy rate has essentially been moving sideways since June of 2011.
The current excess supply prevalent in the market is weighing on rental growth which is currently only marginally positive in nominal terms – negative if adjusted for inflation.
The take-up of excess supply in the market is likely to occur at a slower pace relative to the previous two cycles when economic and employment growth were more robust.
Over the past three to four years slow private sector employment growth has been offset by solid growth in the public sector, but this is also now flattening out.
Regional outlook
On a regional level, the highest vacancy rate of 16.5% at quarter end was recorded for the relatively small market of Port Elizabeth.
Among the four larger metros, Durban recorded the highest vacancy rate at 13.8% with Johannesburg following at 11.4%.
Cape Town and Pretoria were outperformed with 10.2% and 9.1% respectively.
Inner City office vacancies, at 16.6%, are still significantly higher than that of city decentralised nodes at 9.7%.
There were year on year vacancy increases for Johannesburg and Cape Town, while Pretoria and Durban registered improved occupancy rates.
All the larger metro areas barring Johannesburg recorded positive growth in the average asking rental when compared to a year before.
As at the first quarter of 2014, the national office vacancy rate as measured by Sapoa (South African Property Owners Association) stood at 11.0%.
While this is 20 basis points (bps) down from the quarter before, it is still up 40bps up from a year ago.
The national office vacancy rate has essentially been moving sideways since June of 2011.
The current excess supply prevalent in the market is weighing on rental growth which is currently only marginally positive in nominal terms – negative if adjusted for inflation.
The take-up of excess supply in the market is likely to occur at a slower pace relative to the previous two cycles when economic and employment growth were more robust.
Over the past three to four years slow private sector employment growth has been offset by solid growth in the public sector, but this is also now flattening out.
Regional outlook
On a regional level, the highest vacancy rate of 16.5% at quarter end was recorded for the relatively small market of Port Elizabeth.
Among the four larger metros, Durban recorded the highest vacancy rate at 13.8% with Johannesburg following at 11.4%.
Cape Town and Pretoria were outperformed with 10.2% and 9.1% respectively.
Inner City office vacancies, at 16.6%, are still significantly higher than that of city decentralised nodes at 9.7%.
There were year on year vacancy increases for Johannesburg and Cape Town, while Pretoria and Durban registered improved occupancy rates.
All the larger metro areas barring Johannesburg recorded positive growth in the average asking rental when compared to a year before.
