Having earlier this year (June 2012) acquired the management contract for Cape Joint Pension Fund’s portfolio of properties - which are predominantly located throughout the Western Cape – JHI Properties Western Cape region has been awarded further notable property management contracts.
Situated in N1 City precinct in Goodwood, Cape Town and tenanted by Absa, this building was recently acquired by Arrowhead Property Fund and added to their existing portfolio, which is managed by JHI Properties on Arrowhead’s behalf.
These include management of the 26 780 square metre Foretrust building in Cape Town’s central city, which forms part of the Vunani Property Fund.
In addition, in September (2012) JHI was awarded the management contract for the Absa Goodwood building, which is owned by Arrowhead Property Fund, as well as a portion of the Matlotlo Property Fund, which is privately owned.
Liezel Conradie, regional executive in the Western Cape for JHI Properties says their latest building management contract is for Grand Central, comprising 33 616 square metre in the heart of Cape Town.
With effect from December 2012, Ascension Properties Limited acquired this property from Capital Property Fund, and we are pleased to retain management of the centre, which has been part of our portfolio under management for the past few years.
These recent additions to JHI’s portfolio of assets managed in the Western Cape represent a total asset value of approximately R874 million (comprising some 70 000 square metres in total) and we are currently exploring further opportunities in the region.
Commenting on the market in general Conradie says office vacancies in the Cape Town area and surrounds have been relatively stable and even saw a slight decrease in the third quarter (2012).
“Currently office vacancies in JHI managed properties in Cape Town and environs are an average of 9.7 percent, which compares favourably with the Sapoa’s average of around 9.6 percent for these areas”
Interestingly, Conradie says B-grade offices are returning a greater improvement in relation to other classes, which is in line with national trends in the office sector.
Lower rental rates still seem to be a common theme in the market as vacancies are prompting landlords to accept reduced prices in order to fill these.
This is most likely the influential factor behind the B-grade vacancy reduction, as businesses are pressed to accept lower grade offices to meet budget or cost requirements.
However, vacancies are very low in prime locations such as Century City and the V&A Waterfront, despite high rentals, which is testament to the strength of a good location with excellent surrounding infrastructure, says Conradie.
Conradie says right now there is a great deal of choice for prospective new businesses and tenants.
“This is coupled with the fact that the current economic climate requires that in order for landlords to remain competitive in the market they need to include provisions such as rent-free periods and generous tenant installations.”
From a tenant perspective, they can take this time of reduced rentals as an opportunity to secure higher grade offices at a lower rate, taking into account other factors such as relocation costs in their budget.
She says currently the majority of enquiries for office space are from IT firms, international call centres and renewable energy companies.
“The interest in terms of call centres is fuelled by South Africa’s relatively low cost for such structures and generally greater quality of and access to infrastructure in comparison with other African countries.”
The demand from IT firms is being driven mainly by the increasing requirements for Cape Town’s International Convention Centre and technological solutions in business.
Renewable energy companies are beginning to achieve growth in the market due to increased electricity tariffs and an increasing drive for sustainability and social responsibility in South Africa.