pre-feasibility assessment report - Innovationeasterncape.co.za

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African Development Economic ConsultantsADECfrom year-to-year. The year 2007 saw net absorption of almost 7,000 squaremetres, whilst 2008 saw negative absorption of about -3,500 in the market.Office DemandOffice demand in the NMBM Market Area was forecasted based on keyindustry drivers and employment projections, historical take up in the market,and other factors.Key Drivers. Office demand in NMBM has largely been driven by smalllocal professional service providers as well as by national corporate tenantsseeking a presence in the Eastern Cape. Previously, large corporationsheadquartered in Johannesburg and Cape Town established small branches inthe region. Over time, national companies have developed a critical mass ofclients in the Eastern Cape and have expanded their presence in the area.Presently there are very few large companies with headquarters in NelsonMandela Metro, but this is changing as more national companies have realisedthat operating costs are lower in the Eastern Cape. Office demand is also beingdriven to some extent by international companies seeking to locate offices in themetro. This is especially true for import-export-orientated companies who wishto locate close to the city’s growing port. Finally, lifestyle factors such as shortercommutes, less traffic, lower crime rates, and access to the sea are alsohelping to attract companies to Port Elizabeth.Selected Business Sectors. According to statistics published by thePort Elizabeth Regional Chamber of Commerce and Industry (PERCCI), thebusiness services sector accounts for 10% (1,869) of the total number ofregistered businesses (18,423) in the area. The next largest numbers ofbusinesses are in retail trade (1,789) and construction (1,658). Typically aboutone-third of the businesses in these sectors operate out of office space.Table 6. OFFICE-ORIENTED BUSINESS SECTORS BY CONCENTRATION,NELSON MANDELA BAY, 2006Business Sector Number RankLetting and Letting Companies 1,271 4Bookkeeping, Business Consultants, Audit 909 7Engineering Services 755 8Estate Agents 496 10Medical Services (Doctor, Optometrists) 453 14Body Corporates and Controlling Body's 250 22Legal Practices 171 30Insurance Brokers, Long term and short term 166 31Medical Aid Funds, Pensions and Trade Unions 66 37Banking Institutions 63 38Government Institutions 40 43Local Authorities 4 47Total 4,644Sources:Port Elizabeth Regional Chamber of Commerce and Industry and ADEC.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 68
African Development Economic ConsultantsADECAmong the business sectors most likely to generate demand for officespace, the largest number are concentrated in letting (property), businessconsulting, engineering, estate agencies, medical services, body corporates,legal practices, insurance brokerages, and medical aid funds (aside from banksand government institutions). Letting companies account for roughly onequarterof the office-oriented business sectors in the local economy. The lack ofemployment opportunities drives individuals throughout South Africa toestablish their own businesses. As such there is a proliferation of smallerbusinesses with nominal requirements for office accommodation.Employment Trends and Projections. Tertiary industries are the largestemployers for NMBM, accounting for about 50% of resident employment in themetro. Figures from 1996 through 2007 indicate an increase in the number ofpeople employed in the tertiary sectors most likely to generate demand foroffice space.Table 7.EMPLOYMENT TRENDS IN KEY OFFICE SECTORS,NELSON MANDELA BAY METRO, 1996-2007Annual ChangeSector 1996 2001 2007 1996-2001 2001-2007FIRE 15,702 21,662 30,817 7.6% 7.0%CSPS 45,457 48,284 44,253 1.2% -1.4%TOTAL 61,159 69,946 75,070 2.9% 1.2%Notes:Sources:FIRE is finance, insurance, real estate, and business services.CSPS is community, social, and personal services.Statistics South Africa and ADEC.Financial, insurance, real estate, and business services (FIRE) andcommunity, social and personal services (CSPS) are the sectors most likely togenerate demand for office space in the metropolitan market. CSPS remainsthe larger of the two employment sectors; however it has shown negativegrowth during the most recent period. Specific industries that have drivenemployment in this sector are:• Activities of membership organisations,• Recreational and sporting activities; and• Government-related jobs in public administration and defenceFIRE accounted for 15% of tertiary employment in 1996 and 27% by 2007.FIRE is the fastest-growing tertiary sector, adding 96% (more than 15,100 jobs)to resident employment during the ten-year period. Of the tertiary industries,FIRE has the largest proportion of its employees working in office environments.As such, the growth of this sector will further stimulate demand for office space.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 69
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