Q2 2014 Office Market Analyses, Natasha Alomia, Colliers
Q2 results and insights indicate that the Gauteng office market will continue to slow down from a development perspective going forward. Large companies will continue to move into new space, thereby creating increased vacancy levels in older building stock. The challenge for developers will continue to be how to cost-effectively acquire the older stock for redevelopment,and/or refurbishment, so as to attract prospective new tenants.
The office market is set to remain relatively flat in Durban. This trend is likely to continue going forward. Demand for office space in the CBD is limited, and is instead centred north of the Umgeni, La Lucia Ridge and the Umhlanga New Town Centre. It is also predicted that companies will continue to move out of the CBD, with the vacated space being converted into residential units, in many instances.
The Cape Town office market remains under pressure for the foreseeable future. The demand for top level office accommodation has been steady, and this should continue throughout 2014. Corporate clients as well as several of the major law firms require modern and efficient office environments, and are ready to invest in the right spaces. The legacy office space in Cape Town with older building facilities and inefficient floor plates, drag down the overall picture for the office sector. The overall economic environment in South Africa does not look positive enough to affect a rapid change in the office sector performance in the Cape Town metropolitan area.