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Trendy Business Returns To Jozi Cbd
From Property24
21 June 2006
It's hard not to notice the new buildings and developments changing the Jozi city skyline at a bewildering pace. The latest trend is a move back to the inner city that is fast becoming an entertainment venue, buzzing with pavement cafés, shops, shows and exhibitions – all within walking distance.
Needless to say, this has had a positive impact on the commercial sector. More and more retailers, entrepreneurs, corporates etc are moving back. As we know, space inside the city is a commodity and because it is precious, its value is bound to keep on rising. Property Developers Urban Ocean, were the first to capitalize on this valuable space and have subsequently acquired buildings within the Financial District. To date they own approximately 22 buildings, all of which are being refurbished into luxury apartments and top notch offices and retail sectors.
So why the sudden resurge to the inner city? Firstly, the cost of leasing space in the CBD is lower than established markets and innovators are getting great deals for their space. Urban Ocean's rentals start at R45/sqm for loft style offices. Also, since the city has been relatively unoccupied for several years (from a business perspective), new tenants are currently getting access to prime development spaces, before the wave of the masses. The idea of having offices in old buildings (between 50 and 100 years old) is very appealing, especially to the media and creative industries. For example, National Bank House, which is a media hub with tenants such as Studio 7, Trigger, Grey White Productions, Icons Models and AMM Casting has a distinct allure to these industries as the loft office feel is easily replicated here. Exposed ceilings, sealed brick walls and parquet wooden floors combined with modern design elements such as sand blasted glass, hi-tech equipment and funky lighting lends itself to the perfect space for creatives to re-establish themselves.
Secondly, the whole inner city has been earmarked to cater for call centres from South Africa and abroad. There will be a broadband services roll out, which will reduce costs of connecting broadband by as much as 80 %. Outsourcing their call centres to South Africa is a very good alternative for international companies as South Africa's standard of English is internationally acceptable. This combined with the broadband strategy, the low rentals, close proximity to bus stations, train stations and taxi ranks, as well as large empty buildings allowing for open plan floor layouts, makes Johannesburg a great option. The fact that many of the big multinationals' SA offices are in surrounding areas e.g. Sandton, West Rand, East Rand, Pretoria or even the CBD and Braamfontein gives Johannesburg preference over Cape Town, Bloemfontein and Durban.
The immediate and long-term benefits of moving back to the city also serve as great incentives to invest in the Financial District. Comments Christo van Zyl, Project Manager, Urban Ocean, on the immediate benefit; "Traffic is a concern with the amount of traffic flowing towards business zones in the northern suburbs in the morning and away from these areas in the afternoons. By acquiring offices in the Financial District, the tenant's staff has a 99 % guarantee that they will always drive in the opposite direction to the peak hour traffic flow".
The long-term benefits play a valuable role in the decision-making process. As rentals are still relatively low, one can sign a medium to long-term lease at the current rental and with an annual escalation, you can be assured that in 3-5 years time you will be paying just over R55 per sqm while the market price would be close to R90 per sqm. The reason for this increase is due to the tremendous growth and investment (private and public sector) into the city. It is the same as investing in shares, the earlier one can predict the trend and get in first, the more money you will make, or in this case save.
Comments Herman Schoeman, Urban Ocean's Leasing Manager; "The city will follow the trend of most world cities with regards to renewal. In the 80's New York was one of the worst places to live, work or play, but today it is one of the most sought after and property is unaffordable. By getting in now, businesses will not have to pay high premiums and they will also be play an important role in the regeneration of the city. For many companies it is important to be seen to make the first move i.e. to be the trend setters rather than the followers".
Furthermore, crime has been reduced by over 80 % over the last three years in the CBD. This means that vagrants and criminals are looking for "greener pastures" elsewhere. The addition of CCTV cameras on every street has made it nearly impossible to commit a crime in the city. Thus new tenants will benefit from a more secure and controlled working environment
So who is moving back? Well, the caliber of homeowners has most certainly had a direct impact on the profile of businesses moving back to the city. The profile of these home owners are mostly young up-and-coming business men and women as well as the more elite businessmen who conveniently have a penthouse pad for use after those late night office meetings and let us not forget about the many celebrities such as American football legend Randall Cunningham, the mayor and his wife, as well as local TV presenters and stars!
The business trend has previously been for gun-shops and micro lenders, hawkers and the like, and now stylish hair salons, upmarket clothing boutiques, reputable fast food outlets, trendy restaurants and coffee shops are all returning.
As the majority of businesses in the CBD Financial District consist of all major banks whose staff need to eat, have their hair cut or need to shop, businesses are guaranteed clientele. The regular businessman can now get the same high quality business suit, tie or shirt just down the block. Furthermore, the social culture of Johannesburg is ever prevalent and evidence of this can be seen in the number of well-known coffee shops making their debut on the sidewalks.
Never before has the opportunity been better to have your business be part of a flourishing inner city renewal and with the building of new Gautrain between Johannesburg and Pretoria, clientele will literally be arriving on your doorstep!
Original articles published at www.property24.com.
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