The recently published SA Property Owners' Association (Sapoa) office vacancy figures for Cape Town show that in most office nodes vacancies continue to increase.

However, there are signs that in certain nodes they may have peaked, according to Dave Russell of Baker Street Properties, one of Cape Town's largest commercial, industrial and retail property broking organisations.

The quarterly survey reflects vacancies in premier A grade and B grade properties and excludes C and D grade.

And while not all office nodes are included in the survey, notably the V&A Waterfront, it includes the main nodes in the northern suburbs, southern suburbs, Century City, Pinelands and the Cape Town CBD.

"While the survey is not intended (to), and cannot for logistical reasons, cover the entire market, certain trends can be seen in the various areas surveyed which reflect general market conditions," said Russell.

"It is general market knowledge that vacancies in offices over the past three years have increased substantially. However, the survey shows just how these increases affected the various nodes.

"For example in March 2000 in the Cape Town CBD the vacancy factor in all the above graded buildings was 6.7%, today it is 16%. This increase was mainly due to decentralisation at that time.

"In Claremont three years ago vacancies were 5.9% for all grades; it is currently 22.3%. This substantial increase was mainly due to over-development which anticipated a continuation of the decentralisation trend along with the vacancies created in the merger of Norwich and Fedsure, subsequently taken over by Investec, who run their operations from their new regional office in the CBD."

Other business nodes surveyed include Bellville, which moved from 3.9% three years ago to a present combined vacancy of 10% mainly due to speculative development.

"The Rondebosch/Newlands node has also shown a dramatic increase, moving from 1.7% to 15.8% today, a major contributor being the takeover of Southern Life by RMB and the surplus space at Great Westerford being placed on the market," said Russell.

"If one takes a closer look at the recent figures it appears that the trend now shows a levelling off in the vacancies. For example, a year ago in March 2002 the combined vacancy in the Cape Town CBD was 14.6% while it is now 16%.

In Claremont it was 22% and is now marginally up at 22.3%. Bellville shows a similar pattern with a figure of 8.5% a year ago and is currently at 10%.

Rondebosch/ Newlands was 12.7% and is now 15.8%.

"From these figures it appears that, certainly in the CBD and Claremont, vacancies are levelling off. As very little 'spec' developments are taking place, possibly with the exception of Bellville, there is a strong probability that vacancies have peaked and should the economic growth forecast for the next two years be correct, then we can anticipate a take-up of space resulting in a reduction in vacancies," said Russell.

"As vacancies have increased over the past three years, rentals have moved down in sympathy or at best, remained static over this period. However, should vacancies decrease this will in turn place upward pressure on rentals, though there will have to be a major reduction in the present vacancy levels before an increase in rentals is realised. With stock levels as stated above, it is reasonable to forecast that any increase in rentals could be at least 12 to 18 months away."

Russell stressed that there were risks attached to using these figures to establish trends.

"However, the figures do assist us in understanding the property cycle. Fundamentally, though, no matter what analysis or substantiated projections are made, rentals will continue to be determined by the market," he said.