Sandton at a glance

Sandton Office Nodal Report Q1 2018

Key Stats:

Key Market Numbers

Total Stock: 1,840,987 m2

Vacancy Rate: 15.9%

Development Pipeline: 152,000 m2

Grade P rentals: R210-R250/m2/month

The Sandton office market currently has a vacancy rate of 15.9%, the highest level ever recorded for the node since Q3 2014 when the vacancy rate was just below 15% at 14.8%. Compared to the previous quarter, the vacancy rate shifted by 1.9% while on a year-on-year basis the vacancy rate increased by 6.9%.  The vacancy rate for Grade B (which was recorded at 34.2% for Q1 2018) has been gradually increased, largely driven by corporates moving to newer higher quality accommodation and office consolidations, over the past few years and is exerting an upward pressure on the node’s overall vacancy rate. It is worth noting that the vacancy rate for Grade P office accommodation is relatively low at 6.3%.

While the grade P vacancy rate is still relative low, on a year-on-year basis it has recorded a noticeable increase of 2.8%. This highlights the pressure that the office market is experiencing. We forecast that the Grade B vacancies will continue to exert an upward pressure on the overall Sandton vacancy rate. The difference between the grade P and Grade B vacancy rates further highlights the preferences of tenants towards more efficient, greener higher quality accommodation.

Nonetheless, Sandton remains an attractive node. This is evident in continued development activity taking place within the node. Sandton accounts for 37% of office developments in Johannesburg.

Market Outlook

There are other planned developments which have not broken ground as yet. Nonetheless, this indicates the buoyant developer confidence in the node and further highlights the continued demand for office accommodation in the node. New developments tend to exert an upward pressure on average rental rates due to their higher asking rentals. While that may be the case, rental growth is not expected to be large and certainly will not be better than the growth recorded in the previous years where rental growth was above inflation given the difficult economic climate.

1 Commercial Property For Sale in Sandton

FROM R6,400,000

8 Commercial Properties To Let in Sandton

FROM R155 to POA

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