With better highway infrastructure and improved traffic flows, the office nodes of Sunninghill and Rivonia are poised to enjoy steady demand and improved vacancies in 2013, says the latest Office Market Report from Broll Property Group, part of the global CB Richard Ellis network.
Solid cap rates, consistent lease and operating cost escalations, and the reducing vacancy rates are forecast for the next 12 months.
Located in northern Johannesburg, at the nexus of the busy N1 and N3 highways, Rivonia and Sunninghill are solid office nodes – especially with the completion of the upgraded Rivonia/Sunninghill interchange from the N3.
“With an established IT cluster that includes Hewlett Packard and Fujitsu, and a popular retail strip in Rivonia, these areas continue to appeal to their core user groups,” says Broll Property Group, Director Commercial Broking Division Fran Teagle.
Rivonia is expected to attract private and medium-sized companies, as well as owner-occupiers. With ongoing refurbishments of existing office parks in the area it opens up new supply for these users.
Sunninghill, which saw strong take-up rates in 2012, is expected to see more of the same in 2013, especially as a location for businesses which recognize that comparatively lower rentals offer good value.
“These trends are underlined by the fact we’re seeing demand for space of between 100m² and 1,000m²,” adds Teagle.
Other core property indicators for the coming year include cap rates at 9-10 percent, lease escalations at the same, and operating costs escalations a little higher at 10-11 percent.
The report pegs gross rentals at between R85/m² and R125/m² for the next 12 months.
For 2013, Broll predicts stable demand and supply patterns for both areas.
“A-grade office vacancies in particular spiked dramatically in 2011, but have reduced consistently since then and we expect this to continue,” she says.
Significant traffic congestion has been a key challenge for both nodes in recent years and has been effectively reduced by the completion of the new highway interchange.