JHI Properties grows its Western Cape portfolio of management contracts

The Absa building in Goodwood was recently acquired by Arrowhead Property Fund and is managed by JHI Properties.

After signing the management contract last year for Cape Joint Pension Fund’s portfolio of properties, most of which are in the Western Cape, JHI Properties Western Cape region has been awarded further notable property management contracts.

These include management of the 26 780m2 Foretrust building in Cape Town’s central city, which forms part of the Vunani Property Fund. In addition, in September 2012 JHI was awarded the management contract for the Absa Goodwood building, which is owned by Arrowhead Property Fund, as well as a portion of the Matlotlo Property Fund, which is privately owned.

Liezel Conradie, JHI regional executive in the Western Cape, says the firm’s latest building management contract is for Grand Central, a 33 616m2 building in the heart of Cape Town.

“In December 2012, Ascension Properties Limited bought this property from Capital Property Fund, and we are retaining management of the centre, which has been part of our portfolio for the past few years. These recent additions to JHI’s portfolio of assets managed in the Western Cape represent a total asset value of about R874 million (comprising some 70 000m2 in total) and we are exploring further opportunities in the region.”

Commenting on the market in general Conradie says office vacancies in the Cape Town area and surrounds have been relatively stable and even decreased slightly in the third quarter of 2012. Office vacancies in JHI managed properties in Cape Town and environs average 9.7 percent, which is similar to the SAPOA average of around 9.6 percent for these areas.

“Interestingly, B-grade offices are showing greater improvement than other classes, which is in line with national trends in the office sector. Lower rentals still seem to be a common theme as vacancies are prompting landlords to accept reduced prices to fill space. This is most likely the influential factor behind the B-grade vacancy reduction, as businesses are pressed to accept lower grade offices to meet budget or cost requirements.

“However, vacancies are very low in prime locations such as Century City and the V&A Waterfront, despite high rentals, which is testament to the strength of good locations with excellent surrounding infrastructure.”

Conradie says prospective new businesses and tenants have a great deal of choice. For landlords to remain competitive they need to include provisions such as rent-free periods and generous tenant installations. Tenants can take this time of reduced rentals as an opportunity to secure higher grade offices at lower rentals, taking into account other factors such as relocation costs in their budgets.

She says most enquiries for office space are from IT firms, international call centres and renewable energy companies.

“The interest in call centres is fuelled by South Africa’s relatively low cost for such structures and generally greater quality of and access to infrastructure in comparison with other African countries. The demand from IT firms is being driven mainly by the increasing requirements for Cape Town’s International Convention Centre and technological solutions in business. Renewable energy companies are starting to grow due to increased electricity tariffs and an increasing drive for sustainability and social responsibility in South Africa,” says Conradie.

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