pre-feasibility assessment report - Innovationeasterncape.co.za

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African Development Economic ConsultantsADECTable 2.COMPLETED OFFICE AND BANKING DEVELOPMENTS,NELSON MANDELA BAY, 2000-2008Year/Period No. of Buildings Area (m 2 ) Cumulative2000 2 1 609 1 6092001 8 22 627 24 2362002 4 1 824 26 0602003 3 1 336 27 3962004 2 5 784 33 1802005 1 1 125 34 3052006 3 3 059 37 3642007 2 11 245 48 6092008 2 4 864 53 473Change 00-08 - 3 255 51 864Av/Year 00-08 3 5,941 5,941Av/Year 06-08 2 6,389 6,389Sources:Statistics South Africa and ADECNew office construction does not fully capture the total volume of activity inoffice development. Within Nelson Mandela Bay, there has also been a strongsuburban office market component generated from conversions of residentialhouses into office space. As such, additions and alterations of residential andnon residential buildings are also considered.A total of 11,200 plans were passed for additions and alterations toresidential and non residential buildings in the period 2000 to 2008. Of thisamount, 93% were additions and alterations to residential buildings. Incomparison, only 7% of the plans were alterations to non residential buildings.Whilst the vast majority of these alterations did not involve conversion tooffice space, the above chart does provide an indication of the general trend involume of activity. Residential alterations fell during the recession of 2002-2003,but generally increased since that time and peaked in 2007.103 Algernon Road, Norwood (Johannesburg). Tel (011)728-1965 / 6690 Fax (011)728-8371Adec@ADEC1.com. Suite 131, Private Bag X5, Norwood 2117 SOUTH AFRICA 62
African Development Economic ConsultantsADECMarket Area Definition and Key NodesThe Office Market Area considered for this analysis focuses on NelsonMandela Bay Municipality (NMBM). This market consists of several keyconcentrations or office nodes, including the CBD / Central Area, NewtownPark, Greenacres, Walmer, and Millpark. There are also office nodes locatedalong traffic routes such as 6 th Avenue, Walmer Boulevard, Heugh Road, andCape Road (which is also known as the “Golden Mile”). This moniker relates toCape Road’s route through suburbs that provide businesses with maximumexposure.CBD / Central. This node is focused in the Central Business District ofPort Elizabeth. It is bounded by Rink Street to the west, Albany Road to thenorth, Govan Mbeki to the east and Bird Road to the south. The CBD wastraditionally the primary office node for the region, but it is now characterised bydeclining building conditions and high vacancy rates. This situation occurredover the past ten years largely because of the flight of businesses from the CBDto newer suburban office nodes due to perceived safety concerns and a lack ofCBD accessibility following lengthy construction and road works. Rentals areaveraging R15 to R25 per square metre in the CBD.Newtown Park. Newtown Park is decentralised extension of the PortElizabeth CBD. It spans the area bound by Langhoven Drive in the east, CapeRoad in the south, Sixth Avenue in the west, and Worracker Street in the north.The tenant mix comprises largely of corporate and financial institutions. Thisarea is characterised by conversion of residential homes and lots into officebuildings. Some conversions have been remarkable, with the completedemolition of residential homes replaced by three-storey office buildings.However, many offices remain in former dwellings. Hence, the node largelyretains its residential character whilst office grade varies significantly within thearea.Second Avenue in Newtown Park is home to newer office parks includingEden Office Park, Southern Life Office Park, and Broll House. The tenant mix inthe Newtown Park area comprises of insurance and financial brokers, logisticscompanies, cellular and computer service companies, advertising and researchcompanies, plumbing and plant hire companies, architects, engineering firmsand consultants, and medical practices, along with retail and personal servicesincluding hair salons and restaurants.Cape Road (“Golden Mile”). Cape Road is the most prominent addressin the office market. The “Golden Mile” provides maximum exposure forbusinesses as Cape Road runs through many up-market suburbs located in theheart of the decentralised business nodes of Milpark and Newtown Park. TheCape Road office market is split into two sections divided by Mount Road.Offices “above” Mount Road command higher rentals as opposed to offices“below” Mount Road. Like Newtown Park, Cape Road is characterised by anumber of residential conversions. Rentals in this area are averaging R60 toR70 per m 2 However, new office blocks in Cape Road can attract rentals in103 Algernon Road, Norwood (Johannesburg). Tel (011)728-1965 / 6690 Fax (011)728-8371Adec@ADEC1.com. Suite 131, Private Bag X5, Norwood 2117 SOUTH AFRICA 63
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