Over the past few years Cape Town’s central city has attracted huge investment with numerous major new developments, renovations and additions completed, says Selwyn Sharon, commercial broker for Pam Golding Properties in the Cape Peninsula.
“Further new commercial and mixed-use developments planned for initiation in 2015 are a positive re-enforcement of the city’s vibrant business district which has successfully evolved over the past decade to incorporate a strong ‘live, work, play’ ethos and in so doing, attract a burgeoning and complementary residential component.
He says in the commercial property market, where ever-increasing operating (utilities) and rental costs impact on tenants and landlords, the majority of office layouts now favour an open plan environment with boardrooms or small meeting rooms utilised to meet clients and a strong focus on kitchen and staff recreational areas – with some offices even installing showers for cyclists and runners.
“Security of premises and parking facilities also plays an important role, particularly as users in the IT industry, designers, marketing and creative businesses need to cater for being open longer hours.”
Last year (2014) saw considerable progress in projects undertaken and completed. Notable new commercial properties – comprising office space with ground floor retail such as restaurants and coffee bars, include the new landmark skyscraper, Portside, which is almost fully occupied by Old Mutual and First National Bank as well as subsidiaries such as Wesbank, and some smaller tenants.
The new 22 Bree Street, anchored by Bowman Gilfillan, is almost fully tenanted, while the top end of Bree Street has become extremely popular, with landlords receiving frequent requests for restaurant, retail and office spaces. A small owner-occupied property in this same street has been modernised with new finishes and parking added, making it impactful and instantly recognisable. A major renovation is under way and nearing completion at 130 Strand Street – to accommodate a college. Touchstone House, near Portside, where commercial, namely office and ground floor retail units, have been sold via sectional title, is also well under construction.
On Foreshore, a new parking garage has been added to the Standard Bank building, enabling it to offer tenants a reasonable parking ratio, while Roggebaai Place, situated behind SARS and comprising a gross lettable area (GLA) of 12 500, has just been completed with some space still available. In addition, an eight-storey office block at 19 Louis Gradner Street has been refurbished and now incorporates on-site, secure parking.
In the trendy De Waterkant area, in the sought after Hudson building, where Sharon has concluded 90 percent of the leases, a new triple-storey loft has been added. Available to let at a rental rate of R185 per square metre, this exceptional modern unit of 420sqm has high end finishes and a large terrace. Opposite The Hudson, the newly completed, mainly residential mixed-use development, The Mirage, incorporates a retail component with a boutique hotel planned.
“On the fringe of the central city, on Somerset Road in Green Point, new residential developments have transformed the area, where any small building is being sold, demolished and sectional-titled into predominantly residential units. A new development, 22 Somerset Road, is now complete with tenants moving into this small, modern building with two striking, glass facades. Also on the fringe, the Kloof Street area remains very popular among restaurateurs and small businesses, however very few new buildings are constructed due to heritage issues, high acquisition costs and the absence of large properties to redevelop.”
Sharon says Sea Point is also being upgraded at a rapid pace. The refurbished ‘Galleria’ which is now renamed ‘The Point’ is an exciting new development with multi-tier retail and P-Grade offices. The building is almost fully tenanted and offers generous, secure parking for both tenants and customers. An apartment building is being built on the corner of Main and Glen Roads, where a McDonald’s outlet has already opened.
“Other major projects are currently under construction in the city centre and immediate vicinity, with special attention given to parking ratios, green or energy saving technology, P-Grade modern finishes and the latest office design, with emphasis open plan and maximising spaces. In this upper end – P-Grade buildings, office rentals in De Waterkant and new city office developments are approaching the R200 per square metre mark. However, compared to other city centres in cities in Europe or the USA, this is still extremely inexpensive.”
This year a large city block, bounded by Strand, Buitengracht, Bree and Castle Streets, is to be demolished – with heritage properties being retained, and with a new twin-tower hotel development comprising two hotels to be constructed. A further Strand Street development, also encompassing a city block on Rose, Strand and Chiappini Streets, is planned, which will allow for the older, industrial type buildings to be demolished, existing heritage sites to be completely restored and new retail and office accommodation to be developed. Just off Roeland Street new premises for eTV are well under construction.
The Netcare Christiaan Barnard Hospital is making good progress and when completed will be an impressive, high-technology private hospital of note. Earthworks for expansion of Cape Town International Convention Centre have begun, with the increase in space set to yield considerable spin-offs and rewards for Cape Town and surrounds.
Sharon adds that the site opposite Portside, spanning Bree, Loop and old Hans Strydom Roads is undergoing planning and could be developed during 2015, while a new development on Erf 156 in Roggebaai will leave no open sites vacant on Foreshore. “Planned to commence in March this year, this will be sold via sectional title with demand anticipated from Cape Town buyers as the city centre has very little saleable office accommodation.
“In Sea Point, several new developments – to date mostly offices, are planned along Main and Regent Roads, which demonstrates that developers see great future potential in the area. In the V&A Waterfront, the newly constructed Watershed, Allan Gray building and the new converted Silo’s will be notable additions to Cape Town. A new residential complex, with units available to rent, is also almost complete.”
Sharon says that current office vacancies in the central city show that buildings with poor parking ratios, expensive to run air-conditioning systems or in need of upgrading have the highest vacancies and lower than average rental rates. “The advice for landlords is that if they don’t maintain, upgrade and spend a fair amount of capital expenditure on their properties on an ongoing basis then large percentages of the buildings are likely to be downgraded from A to B level and result in vacancies or remain vacant. To rectify the situation exteriors need revamping, old offices require gutting with high energy consuming air-conditioning units replaced, new lifts installed and foyers re-floored and redecorated.
“Parking requirements are high on any tenant’s list of priorities, and certain properties in good positions within the central city are remaining vacant due to offering parking ratios below two to three per 100sqm. In addition, monthly parking rentals are starting to peak up to R1500 per month plus VAT for reserved bays.”