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Lower rentals boost flagging CBD occupancy
OFFICE ACCOMMODATION
FACED with the prospect of having to mothball entire buildings in Johannesburg's CBD, some landlords are prepared to substantially reduce rentals to attract tenants. It appears to be paying off, with newly created Amlease, a subsidiary of Ampros, letting 40 000mē of office accommodation in the CBD in the past three months, valued at R75-million. Another large landlord, Sanlam Properties, says rentals have been reduced and the company has increased the rate of commission paid to brokers on space let in the CBD. Richard O'Sullivan, national leasing manager at Amlease, says the Ampros flagship building, 11 Diagonal Street, is now fully let, having had an occupancy of only 20% a few months ago. New tenants are Anglogold and Mercantile Registrars, which will each occupy about 14 000mē. To accommodate them, Ampros has been forced to move to the Carlton Centre block. In addition, Telkom has signed a five-year lease for 6 210mē at Edura House in Commissioner Street while EHC Engineering will occupy just over 1 000mē at Samancor House over three years. O'Sullivan says rentals have declined by between 20% and 30% in the past few months and are now much more realistic. "Landlords were asking as much as R35mē a year ago, but the average rental on the 40 000mē we have just leased out is about R22mē." Kura Chihota from property consultants Bradford McCormack & Associates says the EHC Engineering rental at Samancor House is fixed at R15 a square metre gross. Frans Rootman, regional manager of Sanlam Properties, says some offices have been divided and smaller spaces of between 80-100mē can be offered. Rentals for these offices are as low as R19mē gross, while the average is between R20mē and R25mē gross. These rentals compare with the average of more than R60mē in Sandton and more than R50mē in Rosebank.
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