How degeneration became regeneration

Posted On Friday, 24 November 2006 02:00 Published by eProp Commercial Property News
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The turnaround story in Johannesburg’s central business district (CBD) is making headlines in several leading newspapers — a stark contrast to the doom and gloom that pervaded just 10 years ago.

Property-Housing-ResidentialThen, urban degradation and spiralling crime fuelled the exodus of businesses from the CBD and surrounding areas. It would not be an exaggeration to say that over the past five years there has been an 180° turnaround in the fortunes of Johannesburg’s city centre, thanks to city improvement districts, a better security presence and renewed property investments. By mid-1996 the great exodus of business from the inner city was nearly complete.

Times Media, then-owner of Business Day, and the JSE were among the last to leave for premises in Rosebank and Sandton. Tales of those days still do the rounds at Business Day. Staff recall having to use a taxi shuttle to move from the offices in Diagonal Street to the parking garages just two blocks away. Walking those two blocks was considered too dangerous.

At the time, many thought the final nail in the CBD’s coffin was the departure of the JSE. Pace Property Group MD David Green says that in 1996 the vacancy level in CBD offices was high, peaking at about 18% for B- and C-grade office space. Grade-B buildings are older than 15 years, while C-grade buildings are about the same age but do not have air conditioning and may not have parking.

These grades make up the majority of office space in the Johannesburg CBD. A-grade office vacancies were lower at about 10%, but fewer A-grade offices were in the area. Grade-A space refers to quality buildings which are fully air conditioned, with parking and lifts. The turnaround in vacancy levels is quite marked — Green says the overall vacancy for all the office grades is now about 4%.

“That is due to a couple of factors including the take-up of previously vacant space and also the conversion of certain office buildings to residential property. This has primarily affected the western side of the city, which is everything west of the Carlton Centre.” While many property investors and developers are now moving back to the city on the back of these improved fortunes, this would not have been possible if government, a few big businesses and private players had not elected to stay.

Government, both local and provincial, elected to increase its use of office space in the city. The mining houses and three of the major banks — Standard Bank, First National Bank and Absa Bank — also elected to stay and rejuvenate the inner city. The Johannesburg Development Agency also worked on various regeneration initiatives, which acted as a catalyst for further redevelopment in the inner city.

Their combined efforts are now bearing fruit as retailers are returning to the CBD.

Last modified on Friday, 16 May 2014 19:40

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