The JLL South Africa research team has released its Q4 2014 research reports for the Johannesburg office market, Johannesburg industrial market and Cape Town office market with the following notable highlights:
In the Johannesburg office market, demand remained muted under the prevailing uncertainty in the economy, leaving rental rates largely unchanged over the period. Taking prices as a guideline, it is evident that the office market remains under pressure, with an abundant supply and prices still at 2013 levels in contrast to rising operational costs. The economy continues to show signs of fragility and vacancies are expected to remain high with rental rates remaining muted.
Industrial space in Johannesburg saw a rise in the quarter, despite the poor performance of the local manufacturing sector in 2014. This can be attributed to increased activity in logistics and distribution. Rental rates remained largely unchanged over the period. Maxi-units have gained appeal due to their efficiency in storage and operational costs, contributing to a flat trend in rental rates in this regard.
The Cape Town office market continued to show stability in the quarter, despite challenging conditions. The CBD and Century City showed the highest growth in Grade A rentals. Few, if any, speculative developments are anticipated in present market conditions. However, these conditions present excellent opportunities for tenants who are being offered very attractive lease terms from landlords.