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Central Durban office market growing in popularity

Category Office Sector

While the migration of certain blue chip tenants from central areas of Durban central to decentralised office nodes continues to be a feature, the Durban CBD and other centrally located office nodes appear to be gaining popularity.

Central Durban is broadly defined as Durban CBD, CBD Fringe, Kingsmead, Point and Berea. The established decentralised nodes are defined as Westville, Kloof, Hillcrest and the Umhlanga, Riverhorse, La Lucia and Mt Edgecombe nodes, explains Frank Reardon, Divisional Director for Broking KwaZulu-Natal: Broll Property Group.

“We have seen an increase in enquiries and tenancies from tenants looking to benefit from the advantages offered by central Durban office locations,” says Reardon.  

He explains that the first quarter of 2017 has seen a number of iconic CBD office blocks achieve full occupancy pointing out that this would have been hard to imagine a few years ago.

“While some of this can be explained by musical chairs with tenants moving into better maintained and managed buildings from sub-standard premises in the CBD, there appears to be additional momentum into central Durban from other areas.”

The continued support from existing and new government departments for office premises in the CBD and surrounds also remain central to the growing strength of the office market in central Durban.

According to the Durban CBD Office Market Report, large historic vacancies left in the CBD when big corporate companies exited, have recently seen take up from both large and smaller tenants. The last  two years have seen a resurgence in institutional investment, targeting large government tenants and astute private developers with both South African and international urban regeneration experience. Click here to download the report.

Feedback from stakeholders and tenants would appear to indicate that the competition between decentralised nodes and central Durban for the same tenants is reaching equilibrium with different nodes providing complimentary options that suit the requirements of businesses.

As a result of a tight economy, some companies and corporates choosing to occupy CBD space at competitive rentals in addition to premium space in Umhlanga are becoming more common, he says.  

“This may also be interpreted as the global trend around seeking value finally playing itself out in the South African office leasing market.”

Lower rentals, better public transport for staff, access to amenities, its central location to the large population centres in the south and west of the city, and more recently, improved perceptions of the CBD continue to be the main drivers of businesses moving into or remaining in the CBD.

Reardon points out that the ability for staff to use rail transport is also a key factor as none of the decentralised nodes are currently served by the rail network, something the city planners need to look at moving forward.

The growing traffic problems brought on by the success of the Umhlanga area as the “office node of choice” are also driving some companies from the node back to central Durban.  He says current roadworks and a large number of new developments taking shape in Umhlanga will continue to put pressure on traffic for the next few years. Only time will tell whether these developments are temporary or permanent.

Recent developments in central Durban are also creating a strong counterbalance to the decentralisation driven by urban decay and the Greenfield developments in the north and west of the City over the last 20 years.

Renewed private and public investment in the CBD, initiatives around better urban management and the creation of targeted nodes and Urban Improvement Precincts (UIPs) are all creating a platform for a turnaround in the popularity of the area.

Parallel efforts to turn around negative perceptions of central Durban through creative marketing of the CBD and events bringing people who left back into the CBD continue to gain momentum.

Furthermore, the success of the existing urban management initiatives in re-establishing Florida Road as a popular and safe entertainment and leisure destination in the city and currently planned UIPs in Glenwood, Musgrave and the Durban Beachfront will continue to increase confidence in central Durban.

Coupled with these developments, government policy directives and a renewed emphasis from all tiers of government on public transport driven developments, better spatial planning and densification driven by the desire to better utilise existing infrastructure also push the “re-centralisation” agenda. 

In Budget 2017, R30 billion was allocated towards urban regeneration initiatives in the city which promise to “reset” Durban for greater global competitiveness and renewed investor interest in the CBD and surrounds.

Reardon says the next phase of the Durban Point development is the promenade extension linking the Beachfront with the harbour mouth and this is set to begin within months. This will ultimately be extended across the city to link the Esplanade and yacht moles via a public pedestrian and cycle friendly “super” promenade.

Additional plans to create a “professional hub” targeting legal and other professionals and plans to develop the Centrum site adjacent to the Convention Centre also strengthen the medium-term prospects for the node.

Author: Broll Property Group

Submitted 04 Apr 17 / Views 1996