As companies look to reduce operational expenses in current economic trading conditions, businesses are relocating to cheaper, more affordable office spaces. But, that’s not the case in Rosebank, Gauteng.
Selecting a region to invest in commercial office space requires careful investigation – particularly if you don’t want to sit with half-capacity properties. Owners of office blocks and business parks in hubs like Sandton and Melrose Arch in Gauteng are experiencing pressure as tenants are turning to Rosebank for space instead – not because it’s cheaper, but because it offers better business solutions.
“Property punters say they are seeing increasing demand in the Rosebank precinct, with rentals surpassing those in Sandton and Melrose Arch. Now, more than ever, it is imperative to attract and retain tenants – particularly in commercial office buildings, which have been hardest hit by increasing vacancies,” says SA Commercial Property News.
“Commercial property owners in Rosebank are not shy to charge premium-grade office tenants top-end rentals, given the demand for space in the district.”
Related: Smart commercial property pricing can give you a competitive edge in 2017
“Rosebank remains a desirable and profitable investment option for those looking to expand their property portfolio other than in Sandton or the Johannesburg CBD. The node is fast becoming the city’s third business centre after Sandton and the inner city,” says investment management company JLL. Boasting the highest office rentals for A-grade buildings among Gauteng’s leading business nodes and with a 6.8% vacancy decrease in the second quarter of 2016, Rosebank office space is filling up fast.
If you’re looking to invest in new buildings this year, you might want to take note of why companies are paying more for better-value properties.
Here are three variables on what’s impacting commercial property rentals in Rosebank, how investors are handling their rentals, and where the next ‘boom’ might take place:
1. Why are companies choosing Rosebank?
A number of medium-sized businesses have set up offices in the suburb of Rosebank for its pedestrian-friendly layout, in addition to the area being well-located and not overly-congested.
JLL says the number of office rentals in Rosebank is surpassing those in Sandton and Melrose Arch. This has allowed Rosebank landlords to charge up to R237/m², while Sandton and Rosebank rentals come in at R207/m² and R193/m² respectively.
“Few Johannesburg suburbs are as well-placed as Rosebank is to take advantage of improving infrastructure and amenities,” says Paul Barrow of Barrow Properties. Barrow is developing a property at the corner of Oxford and Glenhove roads – a 22 000m² multi-use office block.
The company is just one of many taking advantage of the sought-after location’s convenience and services. If you’re looking to invest, Rosebank looks promising, doesn’t it?
2. Added investment in the hub
On top of Barrow’s interest in Rosebank, Redefine Properties is building a 30 000m² office space in the form of the 15-storey Rosebank Towers – set for completion in 2018.
The building will also be the company’s new head office and offers the following to attract tenants:
- Direct, convenient and safe access to the Gautrain Station for pedestrians
- 19 000m² of lettable office space
- Eight storeys of offices
- An estimated 817m² of ground floor retail
- Two basement parking levels.
“We strongly believe that the quality and location of Rosebank will be attractive to a wide range of potential tenants, merging with our strategy to become the landlord of choice for premium space in sought-after nodes like Rosebank,” says Andrew Konig, CEO of Redefine Properties.
“The future demand for Premium and A-grade office space in Rosebank is anticipated to rise significantly. We are excited about introducing this icon to Rosebank’s skyline,” he adds. Accessibility, affordability and amenities are drawcards that high rentals cannot contend with. Because companies seemingly don’t mind paying the higher rental if it’s worth every cent.
But, if you’re still not convinced, there are other options with just as much potential.
Related: Commercial property investments decelerate as owners hold onto value
3. If you don’t want to invest in Rosebank
Between two of Gauteng’s biggest and busiest cities lies Midrand (and Waterfall in particular), and once PwC’s 26-storey office tower is complete early next year, Waterfall is said to become a strong contender for the title of ‘Corporate Headquarter Node Champion of SA’.
“Waterfall City still has a lot of promise and exciting prospects with its new status as Gauteng’s most attractive new corporate headquarters destination given its central location in Gauteng,” says Morné Wilken, CEO of Attacq. Attacq is the property specialist behind the largest single-phase mall development on the continent, Mall of Africa in Waterfall City, Midrand.
With the likes of Novartis, Group Five and Cell C already in the area, you’d be in good company should you choose to invest in properties in the area.
Whether you choose Rosebank or Waterfall, ensure you’ve done your research on the area and its facilities and accessibility. Get in touch with Standard Bank’s commercial property experts for advice and assistance on where to invest.
Before you choose a suitable region to invest in, remember that commercial office space requires careful investigation or you could find yourself with half-capacity properties. While the glory days of Sandton and Melrose Arch as prime office space might have come, and gone, Rosebank and Waterfall are two attractive options that are filling up fast – so make a choice soon, before you’re forced to settle for spaces that don’t offer sound returns.