Rosebank at a glance
Rosebank Office Nodal Report Q3 2017
Stock: 394,516 m2
Overall Vacancy Rate: 11.9%
Grade P Vacancy Rate: 3.3%
Prime rentals: R235/m2 – R250/m2
Rosebank has seen an increased developer interest in the past few years with numerous developments going up (Rosebank Towers, Oxford & Glenhove) and others still in the pipeline. The node accounts for 14.7% of ongoing national office developments. Office supply in Rosebank is expected to increase by at least 18% in the next two years. While there are several ongoing developments, the development pipeline is thinning out due to decline in the number of speculative developments. A major development like the 70,000m2 Galleria redevelopment will be tenant-driven and introduced phase by phase.
Rosebank experienced rapid growth for prime rentals between 2015 and 2017 where the average rental rate for P grade accommodation went from R211/m2 in 2015 to R237/m2 in 2016 and R243/m2 in 2017. Rental growth in the node, in some properties, has been above the 8%-9% annual escalation band indicating that tenants are willing to pay a premium to occupy high quality accommodation and be in a highly sought after node.
The Rosebank vacancy rate currently sits at 11.9%, a 5.9% increase compared to the same period on 2016. This is largely driven by office consolidations, major tenants moving out of the node and new stock introduced to the market that is still unoccupied. Thus creating caution about an over-supply. However, this is not expected to last long given the appeals of the area.
Rosebank remains a highly sought after node and despite the current economic conditions it can be expected to perform well given the healthy interest from both developers and occupiers. Office stock for certain asset classes (Grade B & C) in the node may decrease further as property owners are following the emerging trend of office conversions in response to the high demand for residential accommodation.