2013 Commercial Property Prospects

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09 Jan 2013

Commercial property landlords are going to have to accept minimal rental increases and in many cases, rentals will remain pegged at 2012 levels.

Commercial property landlords are going to have to accept minimal rental increases and in many cases, rentals will remain pegged at 2012 levels.

This is according to Org Geldenhuys, managing director of Pretoria-based property development Abacus Divisions, who says that if rates remain stagnant this effectively means the market is moving backwards – which it now looks poised to do.

“The year has started off very slowly - far slower than most years we have experienced as normally by this time we have interest from the marketplace.”

He believes they are not going to see an increase in rates in the areas they work in and it looks like landlords - and property portfolios - are going to have to be satisfied with 2012 rates in many instances.

How property owners interface with their tenants is going to have an impact on just how well they do in a market that continues to remain soft.

One of the big trends that might possibly emerge in 2013 is the dropping of deposits.

Major property group, Growthpoint, is the pioneer in this regard and late last year, the company issued a press statement saying that they will not be asking new tenants to pay deposits.

This will bring a major reprieve for tenants - and might galvanise more activity in the marketplace.

But, in real terms, it does not translate into more money in the pockets of landlords, he says.

On the bright side, however, it could well lead to a decrease in vacancy levels, which may be the precursor for growth in the commercial property sector.

But this will - at the soonest - only start emerging during the second quarter of 2014.  

He says landlords will need to find ways to secure current tenants and to lure new ones.

“This year will probably see a focus on holding onto current tenants and, hopefully, trying to attract new ones by offering some 'out of the box' marketing ideas.”

Geldenhuys says over and above doing away with deposits, some landlords are trying to lure tenants with increased tenant allowances and rent free periods.

“We are also witnessing landlords providing incentives to brokers and agents of up to 200 percent of usual commission to expose vacant buildings to the brokers' client base - all in the hope of signing up tenants,” he adds.

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