Financial pressure is being felt across Cape Town, with some areas and property types being hit harder than others.
Some are even doing well, considering the economic climate, agents say.
In Stellenbosch, the demand for office space is much lower than in previous years, says Detlef Struck, commercial consultant in the area for Lew Geffen Sotheby’s International Realty. But retail space of 50m² and 100m² and warehouse and industrial space of 200m² and 300m², in good, safe areas, are sought after.
“In recent years, we’ve seen many companies moving their offices from other provinces to the Winelands but this has now dropped off. However, in retail there are still a number of people looking to open shops as there is still a strong private buyer clientele.”
Retail in Stellenbosch and Somerset West malls is “still faring well” but management is selective about its tenants and seek a good tenant mix, Struck says.
Demand for restaurant space is low as there are many establishments in the area.
“Overall, the commercial rental sector is faring better than sales as there is little stock available and what’s on the market is too expensive.”
Some areas are seeing more sales than others, such as Paarden Eiland, where Rawson’s Walter Katzeff says older warehouse units are being sold to developers. These are then transformed into smaller units that return higher yields.
Areas closer to the Cape Town CBD are generally most in demand.
“Businesses that distribute products through freight and cargo would opt to be closer to the harbour and railway network and want large warehouse or ground space for storage of shipping containers.”
This means areas such as Paarden Eiland, Woodstock and Salt River are most in demand. Montague Gardens, Maitland, and Kensington also see demand, although less than areas closer to the CBD.
“Century City remains a popular choice for retail and office space,” Katzeff says.
The industrial sector is generally performing well, especially in areas such as Epping, Maitland, Ndabeni and Montague Gardens, says Lew Geffen Sotheby’s International Realty, Chad Shapiro.
High-end areas attract top-quality tenants.
For landlords, securing medium and long-term low-risk tenants is a priority
“These will also increase the value of a commercial property from both the income that is generated annually, as well as the asset value of the building, that being its value for resale on intrinsic value.”
Echoing this, Seeff’s Frances Gray-Mnukwana says properties that are let on long leases with a good rate of return are most in demand. However, large properties are “just not moving” while smaller properties under R4million are “attracting some interest”.
“Buyers are putting in lower offers and in some cases those offers are being accepted.”
Generally, she says, buyers are looking for smaller properties, for under R2m, and tenants are looking for spaces smaller than 200m².