Sunninghill, Rivonia office rentals rise

According to the Broll Property Group's latest Office Market Report, SA's commercial property sector can expect solid cap rates, consistent lease and operating cost escalations and a reduction in vacancy rates this year. Located in northern Johannesburg, at the busy N1 and N3 highways, Rivonia and Sunninghill are solid office nodes - especially after the completion of the upgraded Rivonia/Sunninghill interchange from the N3.

"With an established IT cluster that includes Hewlett Packard and Fujitsu, and a popular retail strip in Rivonia, these areas continue to appeal to their core user groups," Broll Property Group, director for commercial Broking Division, Fran Teagle says.

Rivonia is expected to attract private and medium-sized companies, as well as owner-occupiers. With refurbishments continuing of existing office parks in the area, it opens up new supply for these users. Sunninghill's strong take-up rates last year are expected to remain constant.

"These trends are underlined by the fact we're seeing demand for space of between 100m² and 1,000m²," Teagle says.

Other core property indicators for the coming year include cap rates at 9% to 10%, lease escalations at the same rates and operating cost escalations a little higher at between 10% and 11%.

The report pegs gross rentals at between R85/m² and R125/m² for the next 12 months.

Broll predicts stable demand and supply patterns for both areas this year.

"A-grade office vacancies in particular, spiked dramatically in 2011, but have been coming down consistently ever since and we expect this trend to continue," says Teagle.

Significant traffic congestion, which had been a key challenge for both nodes in recent years, has been effectively reduced by the completion of the new highway interchange.

Source: Business Day via I-Net Bridge