The commercial property leasing and broking market remains buoyant – despite the cooling off in the economy.

Eris Property Group (formerly RMB Properties) has announced that it has concluded leasing and property investment broking deals to the value of R480m in the past year.

The figure is calculated on the gross rental value of the commercial and industrial leases concluded by Eris’ leasing division and the sum of the sales prices on the buildings sold by its investment broking division. The revenue split is roughly 70% - 30% leasing to investments respectively.

Eris Marketing Director, Hugh Basel, says the commercial leasing market remains exceedingly tight for A-grade properties – especially in high demand areas like the Sandton CBD where office vacancies are running at an all time low of about 2%.

“It’s definitely a landlords’ market,” he says. “Office rentals for better quality buildings in the Sandton area are pushing upwards of the 100/m² gross mark and there seems to be no let up in the rising trend in asking rentals.
 
“Asking rentals on new developments in the Sandton CBD are now in the R140/ m² - R150/ m² gross, range; in Randburg they are around R100/ m²; in Bryanston they are averaging at around R130/ m² and in Pretoria they are fetching between R125/m2 and R130/m2 gross.”

One of the reasons for the persistently high office rentals, Basel speculates, is that rising interest rates and high land costs has affected the viability of new commercial property developments and has deterred speculative development in the market, resulting in a lack of new office stock.

“There is still some development taking place in the high demand nodes,” he says “but it is invariably client specific and is usually being done on a substantially pre-let basis. On the whole, prime office space remains extremely constrained because of the lack of new office developments and the current trends in the domestic economy don’t point to the supply situation improving in the near term.”
 
Nevertheless, Eris has recently concluded a number of sizeable leasing deals across the country ranging between 1 000 m² and 7 000 m² and at varying rental levels. Included in the list of tenants they have found new accommodation for are Standard Bank; Emmanuels; Allstrom; First National Bank and e-Bucks; SA Breweries; Macquarie Securities and Outsurance.

Basel says in tight office letting markets like the current one it is important for tenants wanting to take up new space or re-negotiate their existing leases to partner with a professional broking firm in order to ensure that they get the best deal possible.

“What space is available on the market is generally available to all brokers. But professional broking houses,” he says, “have an advantage over other letting agents in that their market intelligence keeps them in touch with which big tenants are moving out and what new space is coming on stream at any given time.”