Spearhead Reduces Its Vacancies to 5,4%

Posted On Tuesday, 07 November 2006 02:00 Published by eProp Commercial Property News
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Some idea of how healthy Greater Cape Town commercial and industrial property rentals have become can be gained from figures released recently by Ronel Judin, Asset Manager for Spearhead Properties, the loan stock company now merging with Redefine.

Mike FlaxJudin said that currently only 5,42% of Spearhead’s 287 000m2 portfolio is vacant.  “There will always,” said Judin, “be some vacant space because businesses go under, consolidate, upgrade or expand elsewhere – 5 to 6% vacancies can therefore be considered satisfactory.”

Over the last year, said Judin, the biggest improvements in vacancy reductions had been seen in industrial property where vacancies were rapidly diminished.  Retail had also performed well. Spearhead had tracked space demands for some time and had been one of the frontrunners in creating new space, some 100 000m2, mostly commercial, which will come on stream before the end of next year.

“Our CEO, Mike Flax, has said that triple-A grade space could be commanding as much as R180 per m2 by early 2008,” she said.

A growth area, which has surprised many, added Judin, is Woodstock.  This precinct, she said, is very definitely feeling the benefits of successful CID efforts in much the same way as Claremont did two or three years ago.  Properties like Buchanan Square and Newmarket Junction which can still offer semi-industrial space at R30 per m2, along with secure parking, are now much in demand.

“This,” said Judin, “is likely to increase as Cape Town CBD periphery properties are very much “in” at the moment, especially as the conversion of several major buildings for residential use reduced the office space available in the CBD.”

At both Buchanan and Newmarket Spearhead is now in the process of obtaining approval to build additional parking decks – at a total cost in excess of R1 million.  The area’s low rentals, said Judin, have suited the cut-make-and-trim clothing sector as well as advertising agencies, some of which have moved in here in a big way.

Looking at the retail market, Judin said that almost certainly one of the big successes of the coming year will be those projects like Spearhead’s Sable Square which are introducing to Cape Town the concept of outlet retailing, i.e. the system by which retailers and are able to offer big discounts on top brand clothing and other items because these are often last year’s or surplus stock.

“The whole concept of outlet retailing,” she said, “has already been proven in the USA and Europe.” On the industrial side, said Judin, a marked improvement in the profitability of tenants is boosting the demand for industrial space and this will in 2007 be evident at such sites are Montague Gardens and CTX Freight Park, both of which have let well.  Other areas of great promise, she said, are those outlying districts such as Paarl where it is still possible to offer space for as little as R17 per m2. 

“Again, Spearhead was shrewd enough to foresee the demand for decentralised space and by creating the Berg River Park, with 30 000ms, has put itself in a good position to cater for this,” said Judin.

Last modified on Monday, 28 April 2014 14:37

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