The Pretoria decentralised office market seems to be suffering from a combination of weak demand and overzealous development.
According to the report, since 2009 the total stock of office space in Centurion has accelerated and headed north while demand for space (grades A and B combined) has basically moved sideways.
This statement especially applies to Centurion, one of Pretoria’s decentralised largest and most popular office areas, according to the latest Rode Report.
According to the report since 2009 the total stock of office space in Centurion has accelerated and headed north while demand for space (grades A and B combined) has basically moved sideways.
Demand was calculated by subtracting the area available for leasing (vacant space) from the total rentable area (stock).
The widening gap between the stock and demand (as seen in the graph) therefore represents the rise in vacant office space.
This, in turn, would explain why prime office vacancy rates in Centurion jumped from 5 percent in 2009 to 18 percent in Q4 2012.
View the graphs here.
Rode notes that the total rentable area of committed new office developments as well as the percentage of this space that was un-let.
Even though the period between 2010 and 2012 was marked by weak economic activity (a harbinger of lacklustre demand and take-up of office space) new office developments still trended north during this period.
Worrisome for the Centurion office market must be the seemingly speculative nature of these developments.
As at the fourth quarter of 2012, about 48 000 square metres of committed space — of which 86 percent was vacant at the time was still in the pipeline.
This is not good news for an office node currently sitting with a combined grade A & B office vacancy rate of 18 percent, which in itself does not bode well for market rentals in Centurion, according to the report.