Areas and Places

Entrepreneurial growth to drive the Cape’s commercial property demand

Helicopter view of Cape Town
A helicopter's view of Cape Town.

Boosting entrepreneurial and small business growth is not just an objective of national government, but the City of Cape Town (in partnership with the private sector) is also looking to boost the local economy.

Earlier this year, the City of Cape Town announced that it would soon open a business hub to provide small, medium and micro enterprises (SMMEs) and entrepreneurs with guidance and to connect them to business development services. Whilst initially a walk-in facility, there are plans to launch an online version in the future. Partners include the Western Cape Trade and Investment Agency, Business Process Enabling South Africa, Cape Craft and Design Institute and Cape Information Technology Initiative.

Cape Town is renowned for its small businesses, from coffee shops and cafés to fitness centres and a host of services. It is now also recognised as the leading tech hub on the continent. The CBD, De Waterkant and Sea Point area are home to a large concentration of small businesses which operate alongside larger businesses including head offices in the CBD.

Blouberg is another fast growing area which now offers excellent commercial property opportunities according to Peter Rowell, a commercial property specialist with Seeff. He says that there has been an increase in property on the market with more sellers and a greater number of commercial vacancies on all fronts, from offices to retail and industrial.

The type of buyers and tenants looking right now tend to be those who have a successful existing business and want to look at moving to a new location or bigger premises, but there are plenty of space available for new business growth.

Prime properties situated in locations that are seen to be safe and easily accessible are generally sought-after. It is a good time for those tenants/owners who have a definite need for accommodation to source quality properties on more favourable terms.

Rental rates vary depending on the type of property and area but you can expect to pay around R67-R75/sqm for industrial property in Montague Gardens, R85/sqm for commercial property in De Waterkant and R110/sqm to R175/sqm for Century City and the CBD. In Newlands, you could pay around R180/sqm for commercial property, around R190/sqm in Claremont Upper and R220/sqm in Mouille Point.

Frances Gray-Mnukwana, a commercial property specialist with Seeff False Bay says that she is finding that there is a demand for smaller spaces while many business owners are also now looking to downsize to smaller space. The slow demand for retail space has seen some large shopping centres experiment with “pop-up shops” on short term rentals.

Some of the larger listed property companies are also accepting reduced rentals to fill their vacancies. Although commercial properties under R4 million are still attracting interest, clients are generally looking for smaller properties under R2 million and tenants are looking for less than 200sqm.

Tenanted properties with long leases and a good rate of return remain in demand. There is a decline in interest in the busy CBD and Claremont area due to high rental rates, traffic congestion and limited access to affordable parking which has boosted the surrounding areas such as Woodstock, Salt River and Paarden Eiland.

Prices of commercial property generally range from R1,5 million to R39 million. Rentals range from around R50-R65/sqm for industrial property and R120-R150/sqm for commercial space. Opportunities exist for smaller office units of less than 150sqm with affordable parking or secure off street parking as well as smaller light Industrial units with roller door access and good security priced between R70-R150/sqm.