Strong growth in demand for offices, factories

BLUE-chip companies have leased thousands of square metres of office space over the past six months as commercial property demand continues to rise, says property consultancy Bradford McCormack.

These companies include Barclays-Absa, MTN, the Dialogue Group and Credit Suisse Standard Securities, among others.

Rob Fenner, of Bradford McCormack, says the group has experienced unprecedented activity in both its sales and letting divisions recently. There is similar demand on the industrial property side, he says.

The deals vary from 100m² to 20000m² leases and purchases.

Fenner says purchase prices have risen as much as 20% in the past year, while rentals are up 15%-20%.

As a result of the strong demand, stock is hard to come by.

“There is an extremely low vacancy rate in all decentralised nodes for both industrial and commercial space, and economists predict that this shortage is going to worsen in the near future. Both owners and developers are reluctant to sell and as far as zoned land goes, there are few realistic options for potential tenants/owners.”

Bradford McCormack is forecasting “excellent returns” for investors, developers and contractors in this sector in the medium term.

The group says this is reflected in the high rating of the construction and listed property sectors of the JSE.