Fran Teagle, director of commercial property for Broll Gauteng.
Businesses wanting to lease office space in Gauteng can benefit from good opportunities at the moment, says Fran Teagle, director of commercial property for Broll Gauteng.
“There is plenty of space available, with about 10 per cent of offices vacant in most areas in Joburg, ranging from an extreme low of 1.2% in Milpark to a high 18.9% in Rivonia, according to the Sapoa Office Vacancy Survey for the fourth quarter of 2009. This means new tenants are in a good position to negotiate space for immediate occupancy,” says Teagle.
“Although landlords may not be prepared to lower their rentals for potential clients, especially for those who want smaller offices of less than 1 000 m2, property owners will willingly employ other tools in their leasing arsenal to sweeten deals, such as offering generous fit-out allowances. Tenants of premises that are 2 000 m2 or larger are in a strong position to negotiate keen rental deals.
“There are also great opportunities for subletting of space. Some large companies are downsizing and find themselves with unutilised floor space in their building, so they are looking for sublet tenants to occupy these areas,” says Teagle.
Although more tenants are leasing, Teagle says commercial property sales have all but come to a halt at present.
“There are some serious buyers, but a disparity in viable pricing with sellers is proving a stumbling block to successful sales being concluded,” says Teagle.
“Listed prices are too high for the buyers and, despite some tough economic challenges, there are not that many distressed selling and fire-sale prices to satisfy opportunistic buyers.”
Teagle believes there will have to be a shift in market fundamentals before this will change. In the meantime, sellers are willing to wait the market out to get the right price, knowing that it is worthwhile hanging on in the cyclical property market.
“In many cases the price will need to cover the cost of building at the most expensive point in the cycle,” says Teagle, who envisages that it may be some time before commercial property transactions increase.
