Fortress Real Estate Investments Limited has seen an increase in demand for its refurbished offices in Bryanston.
“The hybrid work model and requirements for fresh air and open spaces for employee wellness after the pandemic has resulted in demand for smaller office spaces with spacious outdoor areas,” says Bruce Collins, Head of Asset Management at Fortress.
Four of the six Bryanston office parks in the company’s portfolio have been refurbished after consultation with tenants and brokers. The refurbishments included painting, creating attractive outdoor and reception areas, upgrading balconies, and installing energy efficient lighting and generators where needed.
“Load shedding, whilst disastrous for our economy, is bringing people back to the office … Our premium decentralised offices are now in demand, as people don’t want to travel to Sandton and spend hours in traffic because of load shedding.”
Asking rentals prior to the refurbishments were approximately R105 per metre to R115 per metre. Now Fortress is achieving rentals of between R125 per metre and R140 per metre.
Fortress will continue with refurbishments across its office portfolio to achieve improved valuations. In the current market, there is limited demand for office assets except for owner-occupiers and landlords who are converting offices to residential apartments.
“Offices comprise less than 4% of our total assets and the portfolio is regarded as non-core,” says Collins. “At the end of last year, the portfolio of 30 buildings was valued at R1.5 billion. Our sales team have done a fantastic job of selling the non-core assets at book value or more, and we are now down to 26 office buildings. This is by no means a ‘fire sale’ – we are realistic about the values we can achieve, and we are getting close to book value. Our strategy around the office portfolio – to put it bluntly – is to ‘fix it, fill it, sell it’.”