OFFICE SPACE LEADING CAPE TOWN'S COMMERCIAL SECTOR RESURGENCE

Semigration is driving Cape Town's commercial real estate sector as a growing number of upcountry businesses join the throng of families migrating to the Western Cape with demand for office space in some areas once again reaching pre-pandemic levels. 

According to Brent Townes, Commercial Property Chief Operating Officer for Lew Geffen Sotheby's International Realty in Cape Town, freehold commercial office space has been the top seller in four of their freehold sales areas, namely: Bellville, the CBD, Goodwood and Parow. Their fifth most popular area, Airport industria, is largely populated by Industrial space.  

"It's encouraging to see office space back in the running and also that demand for retail space, our second best seller, is strong again. 

"During the past 12 months, these two sectors have maintained their top-ranking positions in these areas, with industrial space and blocks of flats the group's third and fourth best-selling properties, respectively. 

"The value of registrations of commercial, industrial and retail freehold properties have increased by 10% during the past year (from March 2022 to February 2023) and average values have remained constant, transaction values have thus increased by 10%. 

"During the same period, unit sales of sectional title properties have risen by a significant 33% and average values have also decreased by 18% with transaction values have increased by 10%." 

Townes says that it's worth noting that the decrease in transaction values for sectional title sales is probably due to a number of factors, including changes in the types of properties being sold, shifts in market demand and changes in the local economy.    

One of the drivers is to focus on lower cost of acquisition (overall transaction values) as budgets are tightening up and another is location specific  - certain areas are in demand and they command higher average rate per m2. 

Currently, their best-selling sectional title areas in terms of sales numbers expressed as a percentage of title deeds are: Milnerton/Marconi Beam (including Montagu Gardens) 5,9%, Salt River (manly development sales) 5,67%, CBD 5,04%, Century City 3,4% and Bellville 1,9%. 

For freehold property sales, the most popular suburbs are: Airport 6,98% of title deeds were registered in one year, Goodwood 5,6%, Parow 3,65%, Milnerton Marconi Beam (including Montagu Gardens) 2,76%, CBD 1,29%. 

And, in an overall tally, properties sold by usage across all 54 suburbs serviced by the group, are as follows, with office space the clear leader: 

- Office 328 (58%) 

- Industrial 69 (12%) 

- Shops 61 (11%) 

- Warehouse 47 (8%) 

- Factory 25 (4%) 

- Workshops 19 (3%) 

- Blocks of flats 12 (2%) 

"When you take into consideration the fact that office, industrial and retail space are top-sellers and where the demand currently is, it's clear that decentralisation towards the north and western seaboard is on the increase," says Townes. 

"What started at Century City some years back has been inching further north for a while now, with some companies moving into the N7 corridoor even moving out as far as Stellenbosch in the Winelands." 

Despite the current eco-political climate in South Africa, Townes doesn't expect the burgeoning commercial market in Cape Town to slow down any time soon - if anything, he expects the opposite. 

"Cape Town not only has a high service delivery rating, it also experiences less loadshedding than the rest of the country and, with the local government on track with their own power generation, and IPP's and the scheme for commercial property owners to supply own solar generated power back to the local grid, the future is certainly looking brighter here in the Cape. 

"And, considering 22 of the 41 municipalities with clean audits are in the Western Cape, Townes, perceived better governance is another very compelling drawcard."