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Surge in demand for premises from owner occupiers in northern suburbs

The Northern Suburbs areas of Tyger Valley and Bellville - above and below the N1 - are experiencing a surge in small businesses purchasing commercial property for their own use, reports Volente Bertotti, leasing and sales consultant for Pam Golding Commercial. She says that the convenient and easily accessible Tyger Waterfront continues to mushroom with an ongoing demand for premises. Offices are modern, clean and uncluttered, and commercial sales are extremely healthy.

Bertotti has over the past three months concluded 15 sectional title sales to owner occupiers and says this trend is boosted by the reduced interest rates. "It makes sound business sense for entrepreneurs and smaller businesses to invest in property for their own use instead of letting it out. For example, after putting down a 30 percent deposit, their monthly bond repayments amount to virtually the same that they would be paying in rentals, plus they will enjoy the capital growth on the full value of the investment, not just on the capital invested."

Over the past few years the Northern Suburbs have seen an increasing trend towards commercial sectional title properties. Bertotti says the most sought after size is 150-300sqm, mainly from professional people, IT companies and call centres. In addition, some Johannesburg and Durban businesses are opening branches in these areas.

Call centres are increasingly prevalent in the Western Cape, and overseas and local companies have acquired spacious premises, either to open new centres or in order to expand their operations. In line with this trend, a London-based call centre recently purchased a building in Bellville - below the N1.

Bertotti says on the other hand, several larger companies have downsized their premises - either leasing or purchasing slightly smaller offices.

"There is less demand these days for large, lavish corporate offices. Today 's emphasis is for more efficient use of office space."

The per square metre rate of recent sales concluded by PGC in these areas ranges from R3500-R8000, excluding VAT and parking. Says Bertotti: "They are all good investments, sound value for money, and generally attractive buildings in scenic settings - even those below the N1. As a result of the lower interest rates, the leasing market has slowed - due to the fact that businesses are now buying or investing, rather than renting - and there's currently a wide selection of available lettable space. Landlords acknowledge that they cannot ask unrealistic rentals, especially when a building has limited parking. As a result, over the past year rentals have reduced from approximately R65 per square metre to around R45 per sqm.

Parking in the area costs between R350 and R450 per bay per month excluding VAT."

Mark Kenyon-Slade, PGC's leasing and sales consultant for industrial property, says there's a great deal of activity and an increased uptake of space in both the light and heavy industrial market. The market is buoyant and whereas previously there was a huge supply of available space, there is now a shortage of stock to buy or lease, which is putting upward pressure on rentals and the selling prices of buildings, and new developments are being planned to meet the demand," he says.

Article by: Pam Golding Commercial - www.pamgolding.co.za