Property developments lure businesses from Pretoria CBD

Property developments lure businesses from Pretoria CBD

Urban sprawl to the east and south of Pretoria and the trend of decentralisation from the Pretoria CBD have resulted in the formation of nine basic office nodes in the Tshwane Municipality, says Jan Oelofse, leasing and sales broker for JHI Properties.


Construction of the Podium n Menlyn is scheduled to be completed in mid-year.


"These nodes are Arcadia, Brooklyn, Hatfield, Lynnwood/menlopark - the old east as it is known - Menlyn/ Faerie Glen, Pretoria's eastern suburbs, the new east Centurion, and Highveld Technopark developed in the south.

"The office component in Pretoria's CBD has been and continues to be underpinned by government buildings and tenancies, but the private sector has to a large extent moved to the deconcentration nodes, a trend being followed by some government departments."

Factors contributing to this included poor public transport, which had encouraged private transport, which in turn had affected road congestion.

"The old town planning conditions restricted the provision of adequate parking in developments, so Pretoria CBD has insufficient parking facilities. Ageing buildings, designed for office use 20, 30 or more years ago, are inefficient compared with modern designs, and antiquated facilities including lighting are costly to maintain and incompatible with modern technology. Another factor is that CBD office rentals have been distorted by rental agreements entered into by government over the past five to six years."

Oelofse says rent for office space in the Pretoria CBD varies from R45/m 2 for C-grade space to R65/m2 for B-grade, with installation cost contributions by landlords under certain conditions. However, in the absence of new or competitive developments to satisfy the demand for space, government and the private sector are compelled to either accept rentals offered or to move to deconcentration nodes, where they can find acceptable rent in modern, economically designed buildings, with sufficient parking. And, new buildings generally provide for economical space planning and facilities designed to lower and contain operating costs.
He says Arcadia caters mainly for fring e CBD offices and embassies, with most developments comprising residential conversions.

Hatfield's main commercial activities and development centres on Pretoria University. Office developments are low-density office parks with buildings of 1 000 2 to 3 500m 2 on average, catering for 100m2 to 3 500m2 tenants, with average rentals for A-grade buildings R90 to R95/m2. He says Hatfield is relatively stable with a reported vacancy rate of about 6 percent. Industry data indicates a total of 104 476m 2 of A-grade space with 9 386m 2 vacant. However, development opportunities are restricted.

"Popular due to its proximity to Pretoria CBD, Brooklyn and surrounds provide about 162 000m2 of P- (modern, luxury space) and Agrade office space around a mall. The demand for this area is reflected in the low vacancy rate of between 2 and 3 percent for P- and A-grade space, which fetch gross rentals of R100 to R130/m 2. The average tenant profile varies from small (100m2) to medium (2 000m2) businesses, interspersed with government tenancies. Developments are low-density."

Developed in established residential areas and following retail developments, the Lynnwood/menlopark node is concentrated mainly along major arterial roads. The developments are mainly low-density office parks, for tenancies varying between 100 and 1 000m 2 on average.

However, Oelofse says with the vast improvement of accessibility and traffic flow due to major upgrading of the N1 and the on/off-ramp at Lynnwood Road, the growth of this node has been boosted with the Lynnwood Bridge lifestyle and office park being developed in phases.

This incorporates a City Lodge Hotel, 15 000m 2 of offices and 13 000m2 of retail space. The development will measure about 73 000m2.

Gross rentals for P-grade office space in Lynnbridge vary between R140 and R155/m 2, and rentals for A-grade space average around R100/m2. The latest reported industry figures indicate a total of 232 600m 2 of office space, of which 11 3316m2 is P- and A-grade, with a vacancy rate of 6.5 percent.

"Developed around the Atterbury/n1 on/off-ramps, the Menlyn/faerie Glen retail and office development node was the first real decentralised node in Pretoria, offering the potential for significant growth around the Menlyn shopping centre as a pivotal anchor. The upgrading of the N1 and the Atterbury Road on/off-ramps, and the new Garsfontein on/off-ramps to the N1 and the upgrading of the internal and arterial road infrastructure have greatly improved traffic flow and access to the node.

"The major Menlyn Main mixeduse development... provides for 2 100 000m of residential/ hotel, 44 000m 2 retail and 143 000m2 of office space. The planned developments will be high-profile modern buildings with generous parking facilities. The building design allows for the installation of most modern facilities and infrastructure which will qualify it for at least a four-star Green Star rating." A further two new developments,
2 providing for about 27 000m of space, are scheduled for completion in the second half of the year.

According to recently published figures the total P- and A-grade office space in Menlyn amounts to 209 600m 2 with rentals varying between R105 and R145/m 2. The new and planned developments will provide further 75 000m2 of P-grade space at rentals of over R155/m 2.

Oelofse says the Centurion/highveld Technopark development node has a combined supply of 817 892m2 mainly A- and B-grade office space, with a reported vacancy rate of 9.1 percent. This node was established to cater for commercial growth, so it is not subject to growth restrictions that apply to the other nodes.
However, this area has experienced difficult marketing conditions, mainly due to accessibility restrictions.
These problems have been greatly alleviated by the upgrades to the N1 and John Vorster Drive on/off-ramps, with an added advantage being the Highveld Park and Centurion Gautrain stations that serve these areas.

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