Office property still a tenant driven market

Posted On Wednesday, 19 June 2013 07:02 Published by Commercial Property News
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Tenants are taking advantage of perennially high office vacancies to negotiate favourable long-term leases at low and in some cases, zero escalating rates on rentals

Abacus DIVISIONSThis is according to Org Geldenhuys, managing director of property development and management company, Abacus DIVISIONS.

Geldenhuys says tenants are not only getting leases at good prices, but they are squeezing landlords for a host of additional benefits, such as better parking, better amenities, rebates on water and lights and tailor-made office improvements, or refurbishments.

Many landlords are in a corner with the depressed state of the commercial property market and are more likely to get their arms twisted now than ever before - just to secure long-term tenants. This trend could see a reduction in office vacancy rates in the foreseeable future, which is certainly good news for the market.

"Those landlords who can ride out the storm for the next few years- by offering tenants as many thrills and spills as possible - are likely to be the ones that will survive, and perhaps prosper," Geldenhuys says.

"The landlords unwilling to barter, however, may find their property portfolios with empty holes as they have less rental sign-ons, as well as the added risk of current clients moving over to other landlords, who are willing to offer more preferential deals," Geldenhuys concludes.

This trend is likely to pick up during the course of this year as tenants hustle to get the best deals they can for the next five years, with many being able to peg their rentals at very favourable rates.

Last modified on Wednesday, 19 June 2013 08:18

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