Old offices in Cape Town CBD a ‘treasure trove’ for property refurbishers
Boxwood targets investment and development opportunities in the CBD
Property experts say that the Cape Town central business district’s (CBD’s) office offering is getting old and needs to be revamped and expanded as more corporations look to operate in the city.
Businesses have recognised that not only retirees are moving to the city and the Western Cape as a whole, and they want to employ professionals who are in search of a different lifestyle and career opportunities.
There are also entrepreneurs who have left their careers in cities such as Johannesburg and Pretoria, spent their savings on new business ventures and are looking for modern office space that can accommodate them, according to recent research released by Wesgro, the tourism, trade and investment agency for Cape Town.
Rob Kane, who is a former CEO of a listed property-sector company and the chairman of Cape Town’s Central City Improvement District, has just launched Cape-focused Boxwood Property, which will have a Cape bias but may invest in other cities too.
Kane says the Cape CBD may offer better returns than many other cities in SA, for those who are prepared to "put some love into old, forgotten buildings".
The South African Property Owners Association’s vacancy report released at the end of March 2018 had the national office vacancy rate at 11.5%, largely because landlords were struggling to fill B-and C-grade space in Gauteng.
While the vacancy rate in Johannesburg was 12.8%, Cape Town’s was only 6.9%.
Kane said new stock and existing property that could be divided up to accommodate more people was needed.
"Cape Town is short of premium and A-grade offices, which has created investment and development opportunities for people like me who have worked in the city for years and understand which positions should work for quality tenants," he said.
He and other investors were buying old offices in the inner city with the intention of revamping them to attract professionals and multinationals.
Other investors were looking to build new offices in the city, which could mean buying buildings, demolishing them and replacing them with offices tailored for clients, said property economist Erwin Rode.
Kane was the CEO of Vunani Property Investment Fund but left the company after it was sold to Texton Property Investments a few years ago. He and his broad-based black economic empowerment partner, John Oliphant, have created Boxwood and built up a R1.3bn portfolio. The company concluded a deal with Rebosis Property Fund last week, worth R888m.
"We have a very meaningful R1.3bn Cape Town CBD portfolio, much of which needs redevelopment. This creates a great opportunity to accommodate new tenants and refresh the offering that current tenants are experiencing. As we will control a number of city blocks, we can implement some exciting street-scapes," said Kane.
He was confident momentum in the Cape would continue for years and said Boxwood might be listed in the future.