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Johannesburg - SA's prime business hubs are becoming dotted with To let signs, as the recession forces cash-strapped corporates to downsize.
The South African Property Owners Association's office vacancy survey for the second quarter of 2009 showed a noticeable jump in empty prime business node office space in recent months.
In Sandton, SA's biggest business district after downtown Johannesburg, the office vacancy rate was 7.2% by end-June (from 5.7% end-December). That level was last seen in early 2006.
Empty office space is also mounting in many of Johannesburg's other prominent business nodes. In the Bryanston/Epsom Downs area, the office vacancy doubled from 4% to 8% over the past two quarters. The vacancy rate in Rivonia and Fourways went up from 6.8% to 10.4%, and from 3.7% to 5.6%, respectively.
A similar trend is evident in Cape Town, Durban and Pretoria. The vacancy in Cape Town's CBD rose from 5.2% to 8% over the past two quarters, while mixed-use node Century City and Claremont are both sitting with vacancies of more than 12%.
The empty office supply in Pretoria's inner city went up from 2.8% to 4.3% of available space from December 2008 to June 2009, while vacancies in Brooklyn, New Muckleneuk and Groenkloof more than doubled from 1.6% to 3.4% over the same period.
Industry players said although rising vacancies are partly due to new office stock coming onto the market over the past 12 months, there is growing evidence of companies cutting back on office space and putting expansion plans on hold.
While rising vacancies are bad news for landlords and place pressure on the income earned by listed property companies, it does create an opportunity for tenants to negotiate better deals on lease renewals.
Brett Field, asset manager for Fedgroup Property Management, said landlords are reluctant to face higher vacancies and will be more inclined to offer discounted rentals.
He said in some cases tenants are getting a discount of up to 50% on previous rental levels.
- Fin24.com