The Revival of Cape Town CBD – Attractive Foreshore investment opportunities for blue chip tenants

Galetti Knight Frank November 27, 2015

By Drew Hook

Reaffirming the strategic relevance and increasing appeal of Cape Town’s rapidly transforming Foreshore area, which is undergoing considerable revitalisation, two major corporates have recently concluded lease agreements through Ikon Property Group for prime office space in the area.

Pearson Southern Africa, which is part of a leading global education business, has relocated its headquarters from Pinelands to occupy a single floor of 3 180sqm in the refurbished AAA grade Media City building. Taking a 10 year lease at a competitive monthly rental of R105 per square metre, they have moved premises to be in a more central location in a pleasing environment conducive to staff access and productivity.

The Foreshore precinct has been earmarked as the next major growth node in the Cape Town CBD as it has convenient accessibility to public transport – both MyCiti bus service and Cape Town train station, and being on the periphery of the CBD it has almost immediate access to the N1 and N2 freeways.

The Chairperson of the Cape Town Central City Improvement District (CCID), Rob Kane, notes that a massive re-urbanisation of the Foreshore area has begun. “As the CCID, we define this area as stretching from Riebeek Street and Old Marine Drive down to Table Bay and Nelson Mandela boulevards, and bordered on either side by Buitengracht and Christiaan Barnard Street.

“This is going to completely revitalise the Foreshore, and because of the former, we believe we may see the creation in particular of additional space that can accommodate the healthcare industry – medical practitioners and medically related suppliers – as we know that the demand for rooms in the new hospital is already very high. This is also one of the few areas in the CBD where greenfields developments can still take place.”

In relocating their offices to Media City, Pearson Southern Africa required a high specification fit-out. The new headquarters for Pearson SA was designed to accommodate 335 people in a contemporary new working environment that met international office design standards. The move also signified a cultural shift from cellular offices to an open plan layout, so the new office has plenty of informal areas to collaborate along with’ hot desks’ for staff on the move. Efficient planning was key to optimising space in the new office, down to integrated storage requirements for each workstation.

In terms of energy saving features, keeping the office layout open meant taking advantage of natural light, and incorporating LED light fittings throughout. Pearson USA allocated a ‘green budget’ that allowed for the application of sustainable principles in the design. Motion sensors manage lighting after hours, carbon dioxide sensors monitor fresh air and solar photovoltaic panels have been installed on the roof.

In another recent transaction concluded by Mperdempes in Foreshore, Clicks2customers has relocated from Triangle House in the city centre – a building being converted to residential accommodation, to Redefine’s ‘The Towers’, occupying the entire eighth floor comprising 1 700sqm on a five year lease, at a rental rate of R110 per square metre.

A key element of The Towers – formerly Standard Bank Centre, is its re-greening as part of the redevelopment project, and it has been chosen by the Green Building Council as a pilot project of the Green Star refurbishment tool.

Elton Holland, director of Ikon Property Group says: “The benefits of green features, in addition to the very pleasant working environment for staff, area amenities and ample parking, prompted the move for Clicks2customers, coupled with a competitive rental rate that suited their budget”.

This precinct is very competitive in terms of rentals. Redefine has achieved an excellent value offering by refurbishing the former Standard Bank Centre and provides A-grade space below the rental rate of new developments in the CBD and Century City.

Ikon Property Group is continually working with corporate tenants to offer A-grade space at attractive rentals with suitable parking ratios. Properties in the Foreshore area with strong tenant profiles in good locations can achieve yields of between eight and nine %, which makes them very attractive to investors.

Source: Real Estate Investor Magazine, November 2015

Galetti Knight Frank

Marketing Manager at Galetti Knight Frank

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