Advice and Opinion

Sandton’s A-Grade office oversupply creates affordability

Office space

Seen as South Africa’s most important business and financial hub, Sandton has evolved from what used to be a satellite residential area known in the 1960’s for its class smallholdings and estates. 

In the early 2000’s, major firms (including the Johannesburg Stock Exchange), relocated their operations from down town to Johannesburg to Sandton and an exodus of companies followed, leading to a boom in property development in the area.

Over the years, Sandton’s demand for office space has grown, further fuelled by the development of the Gautrain, resulting in the development of a plethora of large A-Grade office blocks in Sandton – a trend which continued for many years as developers remained drawn to high demand and high rental returns.

However, what has transpired is that Sandton currently has an oversupply of A-Grade office space, which has led to rental attrition because of this oversupply, according to Sean Paul, Executive Director of Spire Property Management who says that the massive ongoing development of new office nodes in the area took out the middle tier of the market.

“Second-hand A grade office space in Sandton is now so much more affordable, with further discounts often being offered. This is good news for businesses who may have previously thought that they could not afford to establish a presence in Sandton because of the high rentals.”

Paul explains that brand new A-Grade office space in Sandton is currently letting for between R220 and R242 per square metre (gross rental), whereas premium second-hand A-Grade property is being offered from R130 per square metre.

For example, Spire currently has vacant space in Upper Grayston Office Park, situated at 150 Linden Street in Strathavon, an existing 5 star Green Star rated building, that is available from R130 per square metre, gross rental. This offers fantastic value in the area in a premium building.”

This opens up a whole new scope of operations and opportunity for many businesses who previously avoided Sandton thinking it to be too pricey. They can now secure A-Grade office space in Johannesburg’s premium business hub for discounted prices,” concludes Paul.