Sandton cements its position as the new Johannesburg CBD

There is no turning back. Sandton has claimed the spot of a new and prime central business district (CBD) for Johannesburg.

Whereas the decline of the Johannesburg CBD has been a given for a while in the post 1994 South Africa, the emergence of Sandton as thee alternative could not be taken for granted. That is because the migration of big business to the north of Johannesburg was diffuse with no clear winner amongst the new northern suburbs’ commercial nodes.

At one point nodes like Rosebank appeared to be on par in development terms with Sandton as alternative CBD. Recent developments suggest that Sandton has opened the gap and claimed the spot of being thee CBD, not only to the expense of Johannesburg CBD but also to the slight detriment of surrounding nodes like Rosebank.

This prognosis could be developed from observations made by property services firm Broll. In a statement released this week Broll’s Gauteng Divisional Director of Office broking Fran Teagle noted that “Office development is continuing apace in Sandton, which is quickly consolidating its position not only as the financial heartland of Johannesburg but also the preferred location for corporate headquarters.”

The statement noted that the Sandton node continues to reap the benefits of the Gautrain, which provides connectivity to both OR Tambo International Airport as well as the greater Johannesburg area and Pretoria.

Office demand is focused on space within walking distance of the station.

Some 200,000m² of new projects are either in the planning stages or under construction in the node, with increasing demand for both sectional title office space and smaller premises in evidence.

Re-development of older and B-grade space is underway, as is a strong shift to Green Star-rated buildings.

The Broll statement noted that another key trend is the relocation of blue-chip corporate tenants into Sandton and out of nodes like Rosebank and Illovo. Examples include Sasol, Webber Wentzel and EY, said Teagle.

Gross achieved rentals for prime space in central Sandton are at R225/m²/month and leases are being secured for 5-10 years.

Nevertheless, traffic congestion – especially at rush hour – continues to be a challenge and demand for parking bays at office buildings is high at 5-6 bays per 100m².

Teagle also noted that office demand across Sandton, Rosebank and Bryanston is tracking closer to Gautrain stations. New development and re-development projects seek to optimize access to both public and private transport options.

Teagle noted that in Rosebank, the Gautrain station is providing a catalyst for both development and re-development. A number of new, prime office developments that are changing the urban face of the node.

Prime office space is achieving R200/m²/month with leases of 5-10 years in line with those in Sandton.

“The planned expansion of Rosebank Mall – which will double its GLA – will provide a top quality retail experience, even though the project is expected to negatively affect the CBD,” said Teagle.

He noted that Bryanston remains a popular node with more affordable rents than either Sandton or Rosebank, at around R150/m²/month.

“Easy access to highways, major arterial routes as well as both retail facilities and good schools make Bryanston a desirable address,” said Teagle.

“These are just some of the locational advantages that led major corporates like Microsoft, Tiger Brands, National Brands and Dimension Data to locate in the node.”

New developments are already almost fully let, which Teagle predicts will create a demand crunch in the next 12 – 18 months, especially for smaller users of space.

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