Leases on approximately 15% (406,000m2) of the space in the portfolio expired in the period and 501 leases for 347,000m2 were renewed, while new lettings on 58,000m2 were concluded.

ApexHi MD David Rice says the industrial leases achieved renewal rental growth of 56%, increasing rentals from an average of R13,27/m2 on expiry to R20,66/m2 on renewal. In addition, the retail and office sectors both recorded renewal rental growth of 15%. “The average rent in the portfolio as at 31 December was R43,99/m2 gross, which still represents upside in the portfolio,” he says.

Total vacancies are currently at 6%, but Rice expects this to drop closer to 5% by the end of June 2008.

“Of the 25,000m2 of vacant office space in the Johannesburg inner city  (about 14% of ApexHi’s office space in the area) at end December 2007, the 5,500m2 at 2 Rissik Street vacated by the Deeds Office has been let to Standard Bank with effect from 1 April and of the 9,800m2  vacant in 222 Smit Street at end December 2007, a lease for 1,800m2 commenced on 1 February 2008, and negotiations for the remaining 8,000m2 are in advanced stages with a local government department. These leases would reduce vacant space in the Johannesburg inner city to less than 10,000m2 in the next few months.

“This is the first time in six years that we can say something positive about inner city rentals and vacancies. The available space has contracted significantly, because the existing tenant base, comprising banks and government departments, continues to expand. In addition, many of the conversions from office space to residential space have taken space out of the market. It is now difficult to find large pockets of space in the area, and rentals are expected to rise,” he says.

In the Durban inner city, office vacancies are also reducing. About 20,000m2 was vacant at end December 2007, representing approximately 12% of ApexHi’s office portfolio in this area. In 320 West Street, a deal for 3,000m2 of the vacant 9,300m2 was concluded since December 2007.

In Pretoria, only 9,000m2 of ApexHi’s 273,000m2 of office space (3%) is vacant, although approximately 13,000m2 is likely to become vacant during the next six months.