For the first time in several years, commercial property developers are bringing speculative office developments to market.
Fran Teagle of Broll says that this bullish sentiment is unique to Sandton Central which, as the financial hub of Africa, has a deep-rooted appeal as a prime business address.
“New speculative property developments coming to market include the 20,000sqm 15 Alice Lane, 10,000sqm Athol Towers and 20,000sqm at 85 Grayston,” says Teagle. “This speculative development shows new confidence is entering the market, certainly for Sandton.”
However, while there are some speculative office developments underway, Teagle confirms that most developments still only get the green light from owners and funders once a major tenancy is confirmed for most of the building.
Teagle explains that central Sandton has lots of rezoned land which means that older buildings all have the potential to be redeveloped to around double their present size. “Should the older buildings be redeveloped to new heights of 20 or 25 floors, there’s potential for around 1,5 million sqm of available bulk in Sandton CBD. However, it’s unlikely all will be built.”
Parking is still a major factor for companies when choosing office space, notes Teagle. “Most demand five parking bays to every 100sqm of office space, and Sandton’s zoning allows for building, in some cases, up to six basement parking levels.”
Besides prime offices to let, Sandton also offers sectional title offices like Katherine & West. “There’s a demand for sectional title units and a shortage of stock in the present market,” says Teagle. “There’s also a big demand for investment stock. There’s little available in Sandton, which means that new development is the only way to gain this.”
Driving demand is the fact that Sandton Central is a district that really works for business, says Teagle. With excellent conferencing, hotels, retail, restaurants and the Sandton Gautrain Station with its direct link to OR Tambo International Airport, the area offers all the essential facilities, on a scale which support business.
“In fact, the city centre is now expanding more strongly beyond the border of Katherine Drive, with new high-rise rights,” notes Teagle.
With its strong business appeal, there’s a pronounced movement into Sandton, says Teagle, even from nearby business nodes like the Rosebank and Illovo area. Companies like Webber Wentzel Attorneys are moving to Redefine Properties 90 Rivonia Road in Sandton. Broll facilitated the deal for Ernst and Young’s move to Sandton. A new head office of some 65,000sqm is also under construction for Sasol in Sandton. This will see an increase in Rosebank office vacancies.
However, Teagle points out, there’s also new movement into Rosebank, notably Standard Bank which will is consolidating several division in its new Rosebank campus.
The demand for prime grade offices in Sandton is also driving new green star rated office developments in the area.
“Businesses, especially large local and international blue-chip companies, seeking premium grade offices expect their properties not only to be green, but to be green star rated,” says Teagle. “Tenants of this calibre expect measured environmental efficiencies and the associated operational costs savings to be integrated into prime offices.”